Freelancers Under GST – An Impact Analysis

Prakash Matre
Prakash Matre at March 20, 2023

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GST for Freelancers India

Freelancers are people who works independently and can work on multiple assignments at one go. As we can see that freelancers comes under the definition of service provider therefore the rules regarding the service will likewise be relevant to him.

Whether a Freelancer needs to be registered under GST?

Here are the cases where the taxpayer needs to be registered under GST:

  • In case when the aggregate turnover of the taxpayer exceeds 20 Lacs INR and for North-Eastern states, this limit is 10 Lacs INR.
  • Any person who provides OIDAR services.
  • Any person who is carrying out any inter-state supply
  • CTP (Casual Taxable Person)
  • NRTP (Non-Resident taxable person)
  • Any person who is supplying goods on behalf of the principal, in other words, an agent
  • ISD (Input service distributor)
  • E-Commerce aggregator or operator

What are OIDAR (Online Information and Database Access or Retrieval) services?

GST for freelancers under the GST Act, OIDAR (Online Information and Database Access or Retrieval) services include the following:

  • Web advertising
  • Cloud Service Provider
  • Provision of e-books, music, film, programming and different intangibles through the web
  • Providing information or data, recovery or in any case to any individual in electronic structure through networking
  • Online gaming

Whether freelancer can obtain registration under composition scheme?

No, a freelancer cannot register under a composition scheme except in restaurants.

What GST rate applies to freelancers?

As per the GST Act, the GST for Indian freelancers applicable to freelancers will 18%.

What are the guidelines with respect to invoicing?

The invoice raised by the freelancer shall be as per the GST on freelance work. The invoice ought to contain name, address, GSTIN of the service provider and the service recipient.

Are freelancers eligible to obtain for ITC (Input Tax Credit)?

The GST filing freelancers, similar to the service provider under the freelance GST is permitted to take Input Tax Credit (ITC) for the services utilized by him to render it. For instance, he might be utilizing a PC, electricity, phone and so forth to offer web support. Further, the tax is charged by the freelancer can likewise be availed as Input by the recipient of the service. Consequently, we can infer that the weight of GST doesn't fall on the freelancer as he or she will gather the additional GST from the clients.

Do a freelancer needs to file returns?

A freelancer needs to furnish a total of 37 GST Returns that include 36 quarterly GST Returns including an annual return. The government will able to track the freelancer who intentionally does not obtain GST registration and collect GST. The government will know about tax evasion through his bank transactions as bank accounts are linked with AADHAAR and PAN. Moreover, the government can also know the turnover of the freelancer in case if the TDS is deducted through his account or recipient bank account. So, it is quite impossible to escape from the eyes of law after evading tax.

The Bottom Line

Through the above statement, we can conclude that a freelancer is bound by the GST Act to obtain GST registration and file GST returns. Moreover, non-compliance may attract penalties and consequences as may be prescribed by the GST law. To avoid the same, freelancers can choose Masters India as it is an authorized GSP that provides A to Z GST services.

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