Be information technology an enterprise or small-scale and mid-sized firms, the Goods and Services Tax (GST) has touched every sector of Republic of india'due south economy. And, yes, even freelancers fall under its radar, but they may or may non accept to pay GST.

Even if you are off the hook from GST equally a freelancer, it is important to know the chapters and verses of how GST works; because you lot volition have to register your business under GST once it grows.

Definition of a freelancer under GST

A freelancer is a person who is not employed by anyone and gets paid by various clients to piece of work on unlike short-term and long-term jobs on a contractual basis. In short, a freelancer is a kind of a service provider without an employer-employee relationship and the GST rules relating to service providers shall also use to freelancers.

Know the easiest way for freelancers to accept payments online.

What is the GST registration limit for a freelancer?

As a service provider , a freelancer is required to mandatorily register under GST in the following situations:

  • When turnover exceeds Rs 20 lakh in a fiscal year (For states other than the Due north-Eastern States)
  • When turnover exceeds Rs 10 lakh in a financial year (For Northward-Eastern states)
  • For services covered under Online Information and Database Access and Retrieval services ( OIDAR services* )
  • In instance of an export service whose value exceeds Rs xx lakh

*According to the GST Act, OIDAR services include the following services:

  • Providing cloud-based services
  • Advertisement on the Internet
  • Online gaming services
  • Provision for selling e-books, music, movie, software and other intangibles via the internet
  • Providing information or data, retrieval or otherwise to any person in electronic form through a computer network

Tin can a freelancer register as a composite dealer?

As per provisions of the GST Human action, whatsoever service provider is not immune to opt for the composition scheme. Nonetheless, a service provider providing eating house services is an exception to this rule.

So, this means that a freelancer cannot opt for the limerick scheme.

If you want to know the merits and demerits of the composition scheme, you lot can read about it here .

Documents required for GST registration

  • Your photograph
  • Copy of your PAN and Aadhaar card
  • Identity and address proof
  • Latest bank business relationship statement or cancelled cheque
  • Your digital signature
  • Electricity or telephone beak
  • The rental understanding for office premises
  • No objection certificate

Here'due south the one-stop solution for like shooting fish in a barrel GST registration

Which GST rates are applicable to freelancers?

The GST rates applicable to freelancers are 0%, five%,12%, 18% and 28% depending on the type of service provided. If there is no specified rate for the service provided, you volition have to accuse 18% GST from your clients. You tin cheque out all the services and their GST rates here .

If you lot're wondering how to include profit margins to your freelance services and get existent-fourth dimension GST inclusive & exclusive rates you lot can bank check out our free GST calculator.

What are the invoicing rules for freelancers?

Whatever invoice raised past a freelancer should be GST-compliant . The invoice should contain all the necessary data such equally proper name, address, GSTIN of the service provider likewise as the recipient, SAC of services, engagement, the value of service provided and so on. Yous tin can refer to our GST invoice guide and create GST-compliant invoices using Razorpay Invoices .

Is a freelancer eligible to claim input revenue enhancement credit?

Input tax credit (ITC) means you can reduce the taxation, which was already paid on purchases, from the GST payable arising from your sales. Equally per the provisions of GST, all the normal taxpayers registered under GST can use ITC to reduce their GST liability.

Similarly, a registered freelancer tin too use such taxes paid on services used by him for the purpose of providing any service.

For instance, a freelance photographer charges Rs 2,50,000 for a wedding shoot and hired a  printing agency at Rs 50,000. In this case, the cyberspace GST payable will exist equally follows:

GST registration for freelancersHow many GST returns does a freelancer take to file?

A freelancer will have to file 25 GST returns in a twelvemonth if he is registered as a normal taxable person. Y'all tin can read more nigh GST render filing here.

What is the penalization for late filing of returns?

  • A late fee of Rs 200 will be levied
  • An interest of xviii% per annum volition also be levied. This volition be calculated past the taxpayer on the taxation to be paid
  • A minimum penalisation of Rs x,000 will be levied if the revenue enhancement has not been paid
  • For the unpaid revenue enhancement, the maximum penalty is x% of the revenue enhancement amount due

What is a holistic solution for freelancers to accept online payments?

You tin use Razorpay for Unregistered Businesses to accept your fees digitally. The payments can be accepted directly from Whatsapp, Facebook, and then on. You tin can as well create GST-compliant invoices for your clients using our product. We offer a complete payment solution for a freelancer. Effort this amazing product once and collect your payments in a matter of minutes.

Fifty-fifty if you are a instructor, boutique owner or a professional, now accepting payments is going to be easier than ever. Nosotros hope!

Hope this commodity served its purpose. If you lot are interested in more i n-depth details near GST , and so stay updated with Razorpay Larn .

Suggested read: Razorpay for unregistered business