Many freelancers and consultants are confused about whether they need to get any registration against Goods and Services Tax or GST. Most of them have misconceptions that GST is for big businesses only. But when the income crosses a certain limit, then you need to get registered under GST. In India, it just feels like Goods and Services Tax gets applied on everyone having an income source, even freelancers.
Here, we will explain how GST registration works for freelancers and consultants. We’ll keep this explanation very simple. By the end, you shall know why and how you can get GST registration in Delhi, with expert help.
Do Freelancers Need GST Registration?
Yes, freelancers and consultants need to register for GST. As soon as your earnings for a year cross more than ₹20 lakhs, you would have to register; for some states, this limit is ₹10 lakhs. This limit is called the threshold limit.
The services you offer as a freelancer also come within the ambit of GST. It includes graphic designing, web development, writing, consulting, and so on. Once you cross the limit of income, GST becomes mandatory.
Why Should Freelancers Get Registered for GST?
Registering has several benefits. Here are a few:
- Compliance: You are adhering to the law by registering under GST. In case your income surpasses the limit and you do not get yourself registered, you will have to pay a fine.
- Input Tax Credit (ITC): Once you are registered, you get ITC. That simply means you can deduct the payable GST on business expenses. Suppose you purchase any software that would be used in the workplace; the amount you pay as GST on it can be claimed by you.
- Larger Clients: Large businesses like to work with registered freelancers. They want your GST number so that they can claim ITC on what they pay you. If you do not have a GST number, they might just be very apprehensive about working with you.
When Must You Register?
You shall need to register for GST when:
-Your annual income is more than ₹20 lakhs or ₹10 lakhs for special states.
– You sell services to clients in other states (inter-state supply).
– You do online selling of services and earn revenues from clients residing outside India.
How to Register for GST?
Registration under GST is an easy process. Here’s how you can get it done:
1. Visit the GST Portal: Log on to the official GST portal. That’s the first step.
2. Click on New Registration: Look for ‘New Registration.’ Click on the link.
3. Fill in Your Details: Put your personal details like name, PAN, mobile number, and email.
4. Enter Your Business Info: You have to provide the business details. It consists of the trade name and type of business.
5. Upload Documents: The portal will require some documents. These are as follows:
- PAN Card
- Proof of address
- Bank account details
- Passport-size photograph
6. Get Your ARN: After submitting this form, you will be provided with an ARN or Application Reference Number which would help you in the tracking of the application.
7. Get Your GSTIN: Once verified, you’ll obtain one identification number against GST. It is known as GSTIN or Goods and Services Tax Identification Number.
How Much GST Are Freelancers Supposed to Charge?
The GST on the services provided by freelancers is 18% of the price. It is a sort of standard rate for most services. You will have to add this tax in the invoices you generate. Suppose you send an invoice of ₹50,000 for a project. You have to add 18% of the amount as GST to it. So, the gross bill will be ₹59,000- ₹50,000 plus ₹9,000 as GST.
Filing GST Returns
Once you are registered, you have to periodically file your returns. This is the key to GST compliance. You can file returns monthly, quarterly, or even yearly, as your income permits.
– GSTR-1: This return is for the outward services. It has to be filed every month.
– GSTR-3B: This is a summary return in which you are supposed to mention all your sales and purchases.
-Annual Return: This return is to be filed annually, summarizing all the transactions of the entire year.
You can file your returns online through the GST portal. Maintain a record of all your invoices and expenses. You shall need them to file the appropriate returns.
For freelancers and consultants, GST registration cannot be taken as a pinch of salt. If your earnings exceed ₹20 lakhs, then you must register yourself. That helps you stay compliant with the law. Furthermore, it might grant you Input Tax Credit and better clients.
If you are confused about whether or not to register for GST, then it is best to consult a tax expert. They can make it easy for you by guiding you in this regard.
Please feel free to contact Saptax Hub in case one needs any further information or assistance regarding registration under GST. As an expert CA firm in Delhi, it provides specialized services in the domain of taxation to freelancers and consultants.
