Indian Freelancers GST Information || freelancer.com

GST for Indian Freelancers: Rules & Regulations

Rules for GST is same for every freelancers as well as partnership firms, LLP, Companies etc.

These same rules connect with self-employed professionals, whether they are providing services to a single client or even to multiple clients.

Registration Requirement Under GST

1. When you're providing services all the way to Rs. 20 lakhs in a financial year – In such a case, you're not required to register under GST in any case and therefore not liable to collect GST.

You're not required to register whether you are providing services within their state, another state as well as outside India. The rule that when sales are manufactured in another state (inter-state), then it is required to register mandatorily is applicable and then sales of goods and NOT to sales of services. (Notification no. 10/2017 – IGST)

Some individuals get confused about if the limit gets extended to Rs. 40 lakhs per year. But it is extended only for goods. For services, it is still Rs. 20 lakhs.

This limit is Rs. 10 lakhs (which is generally Rs. 20 lakh) for persons who're registered in following north-eastern states: –

• Uttarakhand
• Arunachal Pradesh
• Assam
• Jammu & Kashmir
• Manipur
• Meghalaya
• Mizoram
• Nagaland
• Sikkim
• Tripura
• Himachal Pradesh

However, you can register voluntarily under GST to claim back GST paid on input services used. You cannot only claim it back but can also get a cash refund (just like an income tax refund) of the GST paid on input services employed for the export of services.

2. When you're providing services of more than Rs. 20 lakhs/10 lakhs in a financial year — In such a case, registration is mandatory. Even though you are providing all of your services outside India (100% export of services), registration is still mandatory for you.

Registered in GST and get GSTIN using Tax Adda GST Registration Services

• Documents needed for GST registration
• Your photograph
• Copy of one's PAN and Aadhaar card
• Identity and address proof
• Latest bank account statement or cancelled cheque
• Your digital signature
• Electricity or telephone bill 
• The rental agreement for office premises
• No objection certificates
• Voluntary Registration – Effect and Benefits
• A person can register in GST even if his turnover is significantly less than Rs 20 lakh or Rs 10 lakh (in north-eastern states).

If a person takes voluntary registration, then all provisions of GST will connect with him. He required to collect and pay there GST, file returns etc.

Taking voluntary registration is beneficial in cases when a person is incurring heavy expenses where GST is payable. Like: A business gives ads on Google to get new clients, GST of 18% is payable in such cases. If this kind of company doesn't get registered, then such GST can't be claimed. However, if this kind of company takes registration, it can claim GST credit, which may be used later to offset GST liability and may apply for GST refund (subject to certain conditions).

GST Rate On Freelancing

The GST rate is applicable on the cornerstone of the type of service provided. The GST rate is 18% for these forms of services:

• Accounting/Bookkeeping
• Software/App Development
• Technical services
• Call center or customer care
• Data entry
• Designing services
• Marketing Services
• Domain and hosting
• Voice over
• Language Translation
• Management/Consultancy Services

The GST rate is 18% for virtually all services provided via the internet. You can even try to find GST rate on government official website at https://cbic-gst.gov.in/gst-goods-services-rates.html

Export Of Services

For the export of services, you're not necessary to charge GST when you yourself have filed a Letter of Undertaking (LUT). When you yourself have not filed a LUT, you then have to charge GST, and thereafter you might apply for a refund of such GST paid by filing GST Refund forms. LUT is just a very simple form that doesn't require many details, therefore it is advised to file LUT rather than select the refund route.

Prerequisite condition for export of services: –

Client is found outside India

Person providing services is situated in India

Payment must be received in convertible foreign currency. This doesn't mean you have to receive foreign currency in your bank account. Generally, payment is received in dollars by the bank, and they convert it to Indian rupees and transfer it to your account. This may also be considered an amount received in foreign currency, but you must have a Foreign Inward Remittance Certificate (FIRC) for the transaction. Read below for more details.

Providing Services Through Upwork, Fiverr, Freelancer, Guru, Etc.

There is no difference in provisions of GST if services are supplied via online marketplaces like Upwork, Fiverr, or Freelancer.com etc. or provided straight to clients.

Taxability is as under

When the client is found outside India, it will soon be considered an export of services. Get sure you have (FIRC) for  received on Upwork or Freelancer.com. Generally, online platforms provide alternatives for direct bank transfer to India for faster payout, but they cannot provide FIRC. We suggest you take payment via wire transfer or using PayPal as they provide you with a FIRC, which really is a essential document to prove export of services.

When the client is found inside India -> It won't be considered being an export of services since the client is found inside India and GST is applicable on such transactions.

If services provided via the marketplace, then liability to collect GST is on the freelancer only. The market does not have any role in regards to GST.

Foreign Inward Remittance Certificate (FIRC)

You'll want FIRC to prove that the payment has been received in foreign convertible currency, which really is a necessary condition for treating it being an export of services.  

FIRC is furnished by way of your financial institution (in case of wire transfer). Generally, the financial institution emails you the FIRC at the time of crediting the wire switch into your account. 

If the charge has been acquired through global charge gateways like PayPal or Payoneer or Stripe and so on then you have to accumulate FIRC from these price gateways. Payonner and Stripe grant you FIRC alongside with the payment. Beginning in February 2021, PayPal has additionally began to furnish your FIRC freely for all of your payments.

Also, if you are making use of for refund of GST, FIRC is a obligatory record barring which you will now not be in a position to get refund of GST paid at the time of export of provider or refund of GST paid on enter offerings used in export of service.

Composition Scheme

There is a composition scheme for provider companies having turnover of much less than Rs. 50 lakhs. In this scheme, you can pay GST at a fee of 6% in region of relevant GST price on the provider furnished through you (i.e. many times 18%), however you can now not take the advantage of enter tax credit.

Also, if you supply provider to a character in every other kingdom or in some other country, then you can't register beneath the composition scheme.

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Invoicing

General invoicing guidelines are relevant for freelancers. In different words, there are no one-of-a-kind necessities for freelancers. The bill ought to incorporate all the vital statistics such as name, address, GSTIN of the provider company as properly as the recipient, SAC of services, date, the fee of provider supplied and so on.

If you are issuing bill for offerings supplied backyard India underneath LUT and accordingly now not charging GST, then you have to point out in bill “Export of Services barring charge of GST below LUT filed on nineteenth March 2021 having ARN AD080421001248J “

Beginning from 1st April 2021, If you are issuing an consignment to every other commercial enterprise having GST wide variety then it is obligatory to write Service Accounting Codes (SAC) in such invoice. 

Foreign Currency Invoice For Services

Generally, the consignment is raised in overseas foreign money when you grant offerings to a customer backyard India. However, at the time of submitting GST returns, you are required to document your earnings in Indian Rupees. In such case, we advise you to comply with under procedure: –

Raise bill for your patron in overseas currency.

Convert the bill in Indian Rupees the usage of the relevant conversion price as on date of consignment authorized through RBI which is reachable on this internet site – https://www.fbil.org.in/#/home (you can discover the trade charge as soon as you click on on Foreign Exchage Tab).

Use the above transformed price for reporting in GST return as properly as for your bookkeeping purpose.

Once you get hold of the authentic transfer, e book the distinction to Exchange Gain/ Exchange Loss account (direct expenses) in your books.

Note – No GST is payable on change achieve or change loss.

Input Tax Credit

Input tax credit score is the quantity of GST which is paid on purchases and as a consequence allowed as deduction from the GST payable to the government.

There are no one-of-a-kind provisions for enter tax credit score for freelancers. They can take enter tax deposit of GST paid on all commercial enterprise purchases like rent, phone bill, computer, laptop computer and many others different than some purchases on which ITC is now not allowed like buy of motor vehicles, meals payments etc.

GST Returns And Penalty

There are no exceptional provisions involving GST returns for freelancers. Persons with turnover up to Rs. 5-6 crores is file on GST returns in quarterly basis. Two returns are to be filed GSTR-1 and GSTR-3B on month-to-month or quarterly basis. Late prices for late submitting of these returns is Rs. 50 per day per return.

An annual return is additionally required to be filed in Form GSTR-9 (it is made non-obligatory for yr 2017-18 to 2019-20 for people with turnover up to Rs two crore). Late costs for late submitting of GSTR-9 is Rs. 200 per day.