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Are you a freelancer? Key points to know about GST payment
As a freelancer, you now perform services, and the Indian government has established that there are conditions in which you must pay GST.
Any person supplying taxable services must be registered in the state from which he or she is providing such taxable services under current GST laws; if the person’s aggregate turnover in a financial year is more than Rs 20 lakh ( Rs 10 lakh in some states such as those in the North East), the same would apply to freelancers once they exceeded the specified threshold.
Based on the nature of the services offered, the GST rate applicable to any other service provider (which is normally 18%) would also apply to such freelancers.
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The GST costs for a freelancer will be 18% of the total bill amount because it is the replacement service tax. Every bill or invoice you send out must contain 18% GST clearly visible.
What Is The GST Return Filing Process?
GST returns are due quarterly or monthly, depending on the amount of revenue and whether you have chosen the composition scheme. Quarterly returns can be filed by composition vendors or dealers with yearly sales of less than Rs.1.5 crore. You must file GST returns once you have obtained a GST Identification number.
Is it necessary for a freelancer to register for GST?
GST registration for a freelancer is dependent on the following variables, regardless of the nature of your services:
- Annual income of less than $20,000 – No registration necessary.
- Annual income of more than 20 lacs, regardless of customer location in India – Prior registration is necessary.
Who Is Responsible for GST Fees?
Your customers will pay you, and you will pay the government the same. Clients can then claim it as a tax credit when they file their taxes, making it a win-win situation for everyone. Even if your clients ask for a discount, do not pay the GST yourself because you will be responsible for it and your clients will receive a tax credit.
Input tax credit claims
To claim an input tax credit (ITC), freelancers must have an invoice, have received the products and/or services, and guarantee that the tax levied by the supplier has been paid to the government. They must also file their own return. Because obtaining ITC on the basis of fraudulent invoices is a common method of tax evasion, a restriction has been imposed under Section 16(2)(aa), but it is not yet in effect.
This provision strengthens Rule 36(4), which authorises ITC only if the details of the said invoices issued by the suppliers appear in the recipient’s Form GSTR 2A.