Tax & Compliance
GST basics for freelancers and small businesses
If you freelance or run a small business, GST eventually comes up — when you cross a turnover threshold, sell across states, or a client asks for a tax invoice. Here’s the practical shape of it after the 2025 simplification.
The slabs got simpler
The GST 2.0 reforms (effective 22 September 2025) collapsed the old five-rate system into two main slabs — 5% and 18% — plus a special 40% rate for luxury and sin goods, with essentials at 0%. For most freelancers and service providers, the relevant rate is the standard 18%. A few niche rates (3% on jewellery, 0.25% on rough stones) still exist.
Do you even need to register?
Registration is generally required once your annual turnover crosses ₹20 lakh for services (₹40 lakh for goods) — with lower limits of ₹10 lakh / ₹20 lakh in some special-category states. You also need to register, regardless of turnover, if you make inter-state taxable supplies or sell through certain e-commerce operators. Below the threshold and supplying only within your state, you typically don’t have to register — but some freelancers register voluntarily because clients prefer a GST invoice.
Exporting your services?
Service exports (for example, billing an overseas client in foreign currency) are usually treated as zero-rated. You can supply without charging GST by filing a Letter of Undertaking (LUT), which is a common and useful route for freelancers with foreign clients — though the conditions matter, so confirm them.
What a proper GST invoice needs
A compliant tax invoice shows your GSTIN and the client’s, an invoice number and date, a description with the HSN/SAC code, the taxable value, and the tax split — CGST + SGST for within-state work, or IGST for inter-state. The Invoice Generator produces clean invoices, and the GST calculator adds or strips GST so you can quote either tax-inclusive or tax-exclusive.
Composition scheme and returns
Very small businesses can opt for the composition scheme — nominal flat rates on turnover with far less paperwork, but you can’t collect GST from customers or claim input credit, and it’s not available to most service exporters. Regular registrants file periodic returns (commonly GSTR-1 for outward supplies and GSTR-3B for the summary and payment); missing them attracts late fees, so a calendar reminder is worth setting.