QuestionsCategory: GST RegistrationWhat are the implication of GST on Freelancers in India?
Utsab Das asked 2 years ago

Do freelancers need GST registration? If so, what’s the procedure and are there any minimum limits only beyond which it is required?
I read somewhere that there’s a ₹20L limit beyond which GST registration is required. Is this the total invoice amount? If it’s the total amount, does it include GST?
Do we need GST if I’m getting paid in INR (even though the source is the US)? If needed, how do we file it as export?
What’s the difference if the money gets sent in USD? What if the money was first sent in INR then later USD in the same FY?
Would we need to file GST returns on a monthly basis?
What can we claim as input tax credit? How does the claim work with the 44ADA presumptive income?
Are there any complications if I was salaried for the first few months of the year and then became a freelancer?

1 Answers
Shubham Khandelwal answered 2 years ago
  • Do freelancers need GST registration? If so, what’s the procedure and are there any minimum limits only beyond which it is required? : Yes, Freelancers are required to register under GST, however, they enjoy a minimum threshold of 20 Lakhs, unless your turnover (Receipts) exceeds this threshold, you are not required to register under GST.
  • I read somewhere that there’s a ₹20L limit beyond which GST registration is required. Is this the total invoice amount? If it’s the total amount, does it include GST?: Turnover will not include GST (It can’t because you are not registered and you can not collect GST unless you are registered if done so, it’ll be illegal).

 

  • Do we need GST if I’m getting paid in INR (even though the source is the US)? If needed, how do we file it as export? : For showing it as Exports, you must furnish FIRC (Foreign Inward Remittance Certificate) issues by your receiving bank, which validates that bank has received the money from a foreign source and it’s a valid export) Please note that it’s imperative that you establish that you have received consideration in foreign currency to validate your export activity.

 

  • What’s the difference if the money gets sent in USD? What if the money was first sent in INR then later USD in the same FY?: Receipts in INR will not be considered as Exports and you shall pay GST on such transactions if you are registered under GST (Similar to a normal transaction in Indian Territory), for export transactions, you may claim a refund on all GST paid while providing your Freelance Services (Only when you are registered under GST).

 

  • Would we need to file GST returns on a monthly basis? Yes, If you are registered under GST, you must file GSTR-3B on a monthly basis and GSTR-1 on a quarterly basis.

 

  • What can we claim as input tax credit? How does the claim work with the 44ADA presumptive income? Section 44ADA is exclusive of GST (being a separate law), input credit means whatever GST you have paid (Eg GST paid to WeWork) can be claimed for refund/adjusted against your GST liability (Collected from your client), this facility is available only in regard of Goods and Services Tax Law, No credit of GST is available under Income Tax Law, and you have to pay tax separately there.

 

  • Are there any complications if I was salaried for the first few months of the year and then became a freelancer? No, In Your income tax return, you must file both incomes (Form 16 and Freelance Income) that’ll be a straightforward return.

Please note that you can not collect GST from your foreign clients whom you are providing your services, they must be billed without any taxes (law doesn’t provide for the collection of tax from a foreign entity.)

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