GST Registration for freelancers in India:
Before starting with the tax filing let’s first understand who is a freelancer, and that will help you understand how to decide about it’s registration in India?
“A freelancer or freelance worker, is a term commonly used for a person who is self-employed and is not necessarily committed to a particular employer long-term.”
From the above definition it is clear that a freelancer is someone who is self employed and he is mainly providing services and mainly working as an individual entrepreneur.
So, do Freelancers need to register for GST?
The simple answer would be yes, but there are conditions as to when they need to register for GST. The criteria relevant for deciding if the freelancer need to register for GST is their total receipt which includes any receipt which they receive i.e. if someone is providing a professional service in some institute and also doing their freelancing work then both the receipts needs to be seen in aggregate (the only thing which will not be included here is salary, however if you are working in an institute full time but getting paid as a professional then that would also be added for checking your GST limit. For eg: Doctors).
The limit for GST registration is 20 lakh for service provider and as most freelancers are professional they would fall under this limit. However if you are situated in below mentioned state then the limit would be 10 lakh:
- Arunachal Pradesh
- Assam
- Jammu and Kashmir(Fully exempted)
- Manipur
- Mehalaya
- Mizoram
- Nagaland
- Sikkim
- Tripura
- Himachal Pradesh
- Uttarakhand
This limit would include all your receipt i.e. from client situated out of India or from client situated in another state etc.
In the initial days when GST was launched it was compulsory for people providing online supply or supply in different state to register under GST and therefore many website like Freelancer.com would ask for your GST number but now after notification 65/2017 it has been changed and now you need to register only when you cross the threshold limit. However still some websites ask for your GST number and if you want to work with them you will have to compulsorily take GST registration.
Link to download the notification: //www.eepcindia.org/download/171116133235.pdf
Freelancer’s need to pay GST and Income Tax both on their income?
Now, there are many freelancers or people who think that they need to pay both i.e. GST and income tax from their income and this is reducing their income but we need to understand the purpose and difference between Income tax and GST.
Income tax is a direct tax and is leviable on your profit i.e. your receipt less your expenses.
Whereas, GST is an indirect tax and it is not levied from you, you need to pay it to government but you can recover it from your customer. Therefore when you quote your price or budget you need to quote it including this value and recover it from client so that you don’t have to pay it from your pocket and if you have to pay it from your pocket don’t include that amount in your sales while calculating your income tax because we don’t need to pay income tax on GST component.
If you are providing service to Indian customer and if you are charging GST from them you need to issue them bill showing GST amount so that they can claim credit of such GST paid by them in their business.
Hope now this clears your doubt and you don’t feel that you are required to pay double tax on your income.
You can even register with us by clicking on this: GST registration.
If you need assistance you can ask a question to our expert and get the answer within an hour or post a comment about your views on the post.
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