To have an independent portfolio of work is advantageous and a boon for any freelancer. However, along with it comes the added cautiousness of legal compliances, of which, most of us are completely oblivious to. The chord is struck only when you receive dreadful notices of tax penalties from Tax Authorities. Have you received any such notices as of yet?
Let’s bust some myths and have a closer look to know when GST is attracted, and what all
we measures we should take.
Are freelancers required to obtain registration under the GST Act?
GST Registration is required only when there is:
Also Read- Compulsory Registration under GST
What are the applicable tax rates for freelancers?
A GST rate of 18% is applicable in most freelancing services. For example, Vaishali designs a campaign for Veet, for which she charges Rs.10,00,000. In this case, she shall issue an invoice for Rs.11,80,000 (18%*10,00,000 + 10,00,000)
What is Input Tax Credit and can a freelancer avail it?
We shall understand the concept of Input Tax Credit with the following example:
Suppose a freelancer photographer charges Rs.25,00,000 for the services carried, had hired a staff for which he had born expenses to tune of Rs.5,00,000.
In this case, the net GST payable shall be computed as follows:
The above case relates to a freelancer that has been providing services only in India. What happens in case he offers such services outside India? Such services fall under the category of ‘zero rated supply of goods’ in which the following facilities available:
|paying Tax Liability as per the Act and taking a
|Signing a Letter of Undertaking|
|Particulars||Amount(in INR)||Particulars||Amount(in INR)|
|Photography Services Provided Outside India||25,00,000
|Photography Services Provided Outside India||25,00,000|
|Add: GST to be paid @18%||4,50,000||Total Amount Charged||25,00,000|
|Total Amount Charged||25,50,000
|Refund of GST Availed||4,50,000||Staffing Charges Paid||5,00,000|
How should a GST Invoice generated by a freelancer look like?
A basic invoice generated by a freelancer must cover the following elements:
√ Name, Business Address, GST Number
√Invoice Serial Number
√ Client’s Name, Address and GST Number (if applicable)
√ The particulars, value and total amount charged for the services offered
√ The applicable tax rate
Is a freelancer required to file GST Returns?
Every registered person is required to file GST Returns. A summary of such forms have been represented in the table below:
|Return Form||Eligibility||Contents of the Return||Frequency|
|Where Annual Turnover* is up to Rs.1.5 crore||A detailed return of all the sales/
|Where Annual Turnover* is greater than Rs.1.5 crore||Monthly|
|GSTR-3B||All Service Providers||It is a summary of all services provided, GST paid, Input Tax Credit Availed against such payments.||Monthly
|GSTR-9||All Service Providers||Annual Return||Annual|
*Gross Receipts (Without deduction of any expenses)
GST is predominantly a new concept. Most people are tensed with the changes that have been brought with the introduction of GST. Do you have doubts which are still unanswered? Don’t worry, we’re there at your beck and call to resolve all your queries. You can contact Sakshi Jain at [email protected]