GST Rules & Regulations for Freelancers
The freelancing culture is on the rise given the technological advancement of the country and the freelancers fall under the ambit of GST. Filing regular GST returns, securing a registration, and claiming an input tax credit are some of the basic implications/benefits for freelancers. Generally, in the gig economy, freelancing refers to the work which is done independently on a contract basis. Freelancers earn wages from short-term work. The freelancing work culture is a non-conventional framework and there are several implications under GST for freelancers.
GST Registration for Freelancers
Under the following conditions, a freelancer has to get registered under GST.
- For services covered under online information and database access and retrieval services (OIDAR), freelancers providing OIDAR services to Indian clients from abroad must register for GST in India
- When aggregate annual turnover is more than Rs 20 lakh or Rs 40 lakh in some of the states
- In case of export service whose value exceeds Rs 20 lakh
- No registration is required for freelancing work in zero-rated supplies
OIDAR services refer to the following
- Cloud-based services
- Advertising on the internet
- Online gaming services
- Provision for selling e-books, music, software, and other intangibles via the internet
- Providing data or information through a computer network, electronically
Taxability of Freelancing Work in India
Any income derived from the use of personal intellectual or manual skills and talent is considered as income from the profession. Such income is taxed under the head “income from profits and gains from business or profession”.
Freelancing work is treated as taxable work under GST. Normally, the GST rates on freelancing are 18% but they can also be 0%, 5%, 12%, and 28% as well. An 18% GST rate is applicable on freelancing services in the following categories
- Membership fees charged for subscription to any club, association, or society
- On virtual tokens for connects for job proposals on online platforms
- Freelancer service fees deducted by the platforms for earnings
Other lower GST rates are available for freelancers who have comparatively low annual turnover amounts. Such persons can enroll under the composition scheme in GST and reap the benefits of this scheme. Taxpayers registered under the composition scheme and doing freelancing work can pay the tax at the of 1% to 6% if registered for composition scheme.
TDS Returns on Freelancing
- 10% TDS is deductible on the payment above Rs 30,000 for professional contract services under section 194J
- If the freelancer does not provide PAN, the rate of TDS deduction becomes 20% of the total payment made to them
Get Started with TaxDunia
Freelancers can claim Input Tax Credits as well. If you are working as a freelancer and do not know how to meet GST compliance and bear the liabilities, reach out to TaxDunia. We can help you find out how to ITC, get registered, and deduct TDS as well. Let us start working together.
