Log In Sign Up

GST Filing & Invoicing Simplified

with ClearTax GST Software

The GST has brought in a uniform law throughout the country be it for large business houses or the small and mid-size firms. Every person is directly or indirectly affected by it. We should know that even the freelancers would fall under the ambit of GST. We will analyze the impact on freelancers under GST in this article.

Freelancers are persons who work on multiple engagements and are not employed by anyone. They work under contract basis on specific assignments and receive a contract fee for the same. On reading the definition, it becomes clear that a freelancer is a service provider and rules relating to service provider shall also be applicable to him.

Whether a ‘Freelancer’ is liable to be registered?

We know that under the GST law, mandatory registration needs to be obtained in the following situations:

  • When the turnover crosses the threshold limit of Rs. 20 lacs (general cases)
  • When the turnover crosses the threshold limit of Rs. 10 lacs (specific cases of North-east states)
  • For services covered under Online Information and Database Access and Retrieval services (‘OIDAR’)
  • Cases when there is an export of service. For example, if a person writes an article for an organization in the UK and the amount is paid to the person in Pounds (receipt should be in foreign exchange), then it will be considered as an export of service.

What are OIDAR services?

Under the GST Act, OIDAR services include the following:

  • Advertising on internet
  • Providing cloud service
  • Provision of e-books, music, movie, software and other intangibles via the internet
  • Providing data or information, retrieval or otherwise to any person in electronic form through a computer network
  • Online gaming

For more information on OIDAR click here

Whether composition scheme is applicable to a freelancer?

As per the GST Act, composition scheme is not applicable to a service provider except a service provider providing restaurant service. Based on the above, we can conclude that composition scheme is not applicable for a freelancer.

What would be the rate of tax applicable?

The rates of tax under GST are 0%, 5%, 12%, 18% and 28%. The services will be taxed as per the respective slab rates. If nothing is specified, 18% would be the applicable tax rate.

What are the rules regarding invoicing?

The invoice raised by the freelancer shall be according to the GST laws. The invoice should contain name, address, GSTIN of the supplier as well as the recipient, SAC of services, date, value, and signature. To know more about invoice, click here

Is the service provider eligible for input?

The freelancer, like any other taxpayer under the GST is allowed to take the input of the services used by him for the purpose of rendering service. For example, he may be using a laptop, electricity, telephone etc to provide taxable service.

Further, the tax being charged by the freelancer can also be taken as input by the recipient of service. Therefore, we can conclude that the burden of GST does not fall on the freelancer nor will his fee be reduced as he will be collecting the extra tax amount from the customers.

Should returns be filed?

A total of 37 Returns should be filed which includes 3 monthly returns and 1 annual return. To read more about filing returns,  click here

If a freelancer does not opt to register and collect GST, it is not that the Government will not be able to track it. The department will still know about his turnover either if TDS is deducted in his case (by the person making payment to him) or through the payments in his bank accounts. Since all accounts are Aadhar and PAN linked, it is tough to escape from the eyes of Law.

We can now comprehend that a freelancer is bound by the laws of the Act and non-compliance may result in a penalty. To avoid the same, expert advice is recommended for registration, return filing and invoicing.

Claim 100% ITC using ClearTax Advanced Reconciliation Tool
Sign Up Now