Law Legends


GST Implication on Services provided by Freelancer in India and Abroad

GST Implication on Services provided by Freelancer in India and Abroad

In this Article you will learn :

Ø Who is Freelancer?

Ø  Is Freelancer covered in GST?

Ø  Does registration liability also arise?

Ø Turnover Limit for GST Registration

Ø GST Rate on Freelancing

Ø Can freelancers opt for Composition scheme?

Ø Invoicing

Ø ITC (Input Tax Credit)

Ø GST Returns

Ø Provisions of GST on export of services

Ø   Will Import Export Code (IEC) be required to export service?

In today's Digital Era, services of freelancers are being taken globally. What implications can GST have on freelancing services, this is a big topic and the people who are engaged in freelancing are not even aware of GST implications and even if they have the information, it is only incomplete. Because of which they are not able to comply with the law knowingly or unknowingly. Because of which they can become victims of heavy penalty.

Today we will discuss this topic in depth in this article.

Who is Freelancer?

Freelancer means a person who works on specific assignment basis, means project basis. Freelancers work independently, meaning there is no relationship between employee and employer in freelancing services. Freelancer is a self-employed professional and all the rules of service provider are applicable on him, whether he provides service to a single client or multiple clients.

The most important question?

  • Is Freelancer covered in GST?
  • And does the liability of registration also arise?

Freelancer is covered under section 2(17)(g) of GST, meaning GST will be applicable on the services provided by the freelancer.

Turnover Limit:-

If the turnover threshold limit of Freelancer is Rs. 20 lakh or in special category states if it is more than Rs.10 lakh, then it is liable for registration.

Special category states

(In case of below states the limit of registration will be Rs.10 lakh)

Manipur Mizoram
Nagaland Tripura

Important notes:

  • If you are exporting 100% services, the value of the services provided by you should be Rs. 20 lakh or more than Rs.10 lakh (as applicable) in the specified state, then you will have to take compulsory GST registration in such cases.
  • If your turnover is the threshold limit (20 lakh / 10 lakh) or less, then you can provide service within state, outside state and outside India also without GST registration. The rule that mandatory registration is required if sales are made inter-state, applies only to the sale of goods and not to the provision of services.

GST Rate on Freelancing

GST rates are decided according to the category of service provided by you. Generally, the kind of services that freelancers provide, like accounting, software development, technical service, data entry, domain & hosting, marketing, designing, consultancy etc. GST at the rate of 18% will be applicable on these.

You can visit the official website of GST Rates Government: you can check by visiting.

Can freelancers opt for Composition scheme?

In GST, on 7th March 2019, a notification no. 02/2019-A new provision was added to the composition scheme by Central Tax (Rate), in which the aggregate turnover of the service provider in the preceding financial year is Rs. Not more than Rs 50 lakh or turnover in the current year is Rs. If the income is not more than Rs 50 lakh then Composition scheme can be opted and they will have to pay 6% GST (3% SGST+3% CGST).


General invoicing rules are applicable for freelancers also. Freelancer will also have to make tax invoice as per GST Act, in which all the necessary information “name, address, GSTIN of the service provider as well as the recipient, SAC of services, date, the value of service provided” will have to be mentioned.

If you are providing services outside India by filing LUT and are not charging GST, then you will have to mention in the invoice:-

“Export of Services without payment of GST under LUT filed on dated_____________having ARN _________________”

ITC (Input Tax Credit):

The provisions of GST Act are equally applicable for freelancers, hence freelancers are also eligible to claim ITC on purchases of goods and services. Like laptop, computer, office rent etc. But you can adjust the GST paid from your output tax liability. But if the freelancer is registered in composition then he cannot claim ITC.

(a) For normal tax payers :

If the aggregate turnover of the service provider is less than Rs 5 crore in the preceding financial year then he can file Form GSTR-1 and Form GSTR-3B quarterly, but if the turnover is more than Rs 5 crore then he will have to file monthly return.

(b) For composition tax payers :

They have to file CMP-08 return on quarterly basis.

What provisions of GST will have to be complied with when exporting services?

Due to technological advancement, there has been exponential growth in the freelancer market globally, due to which exporting services has become very easy today. Export of services has been explained in GST, if the service provider exports services then it will be considered as export when:-

1) The supplier of services should be in India.

2) The recipient of the service should be outside India.

3) And the service being supplied should be outside India.

4) Payment for the services supplied should be received in convertible    foreign exchange or Indian currency (as permitted by RBI).

5) The supplier and recipient of the service should not be   establishments of separate persons.

To export service, freelancer can opt for 2 options:-
(a)     By filing Bond/LUT (without payment of tax):

In case of LUT, the service provider is not required to charge IGST in the tax invoice, he can export the service by filing LUT (Letter of Undertaking).

(b) with payment of tax and later apply for refund  :

If the service provider does not file LUT then they will have to export after paying IGST. After exporting, the service provider can take refund claim of IGST.

Will Import Export Code (IEC) be required to export service?

‘Import Export Code’ is a 10 digit code, which is issued by the Director General of Foreign Trade (DGFT). It is not compulsory to export the service. But, if the service provider is taking benefits of Foreign Trade Policy, then he will have to take IEC.

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