Liability for gst in case of of on line free lancing job

This query is : Resolved

Abhishek Roy Choudhury (Querist)
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31 August 2017 Dear Sir,
An Assessee whose business is On Line Free Lancing Job, i.e. they give advise to Foreign Clients through On Line. Whether they are required to register under GST as their income is above Rs. 20.00 Lacs per annum. If registration is compulsory then please tell whether they are exempted to pay tax under GST Regime and how they will file Return under GST.

Thanks,
Abhishek.

Abhishek Roy Choudhury

Abhishek Roy Choudhury (Querist)
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03 September 2017 Dear Sir,
Please answer to the query.

Thanks,
Abhishek.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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02 August 2024 For a person engaged in online freelancing services, especially providing advice to foreign clients, there are specific GST regulations that apply. Here’s a detailed breakdown regarding GST registration, tax liability, and filing for such a business:

### **1. GST Registration Requirement**

**a. **Threshold Limit for GST Registration:**
- As per GST regulations, any supplier of services whose aggregate turnover exceeds Rs. 20 lakhs (Rs. 10 lakhs for special category states) in a financial year is required to obtain GST registration. Since your income exceeds Rs. 20 lakhs per annum, you are required to register under GST.

**b. **Exemptions:**
- There is no specific exemption for online freelancing services based on income level. GST registration is mandatory if the turnover threshold is exceeded.

### **2. Tax Liability Under GST**

**a. **Export of Services:**
- Since the services are provided to foreign clients, these are considered as "export of services" under GST.
- **Export of Services:** According to GST laws, export of services is considered a "zero-rated supply." This means that while you are required to charge GST at a rate of 0% on the invoice, you can claim a refund of the input tax credit (ITC) on inputs and input services used to provide these services.

**b. **Tax Payable:**
- On invoices raised for export of services, you do not need to charge GST, but you must comply with the conditions for zero-rated supplies. This includes maintaining proper documentation and complying with procedural requirements.

### **3. Filing GST Returns**

**a. **GST Returns Filing:**
- **Regular Returns:** As a registered GST taxpayer, you will need to file periodic GST returns, including:
- **GSTR-1:** Details of outward supplies (sales) including export of services.
- **GSTR-3B:** Summary of outward supplies and input tax credits.
- **GSTR-9:** Annual return, summarizing the total sales and purchases.
- **Zero-Rated Supply:** While filing GSTR-1, you should report the export of services as zero-rated supplies. Ensure that all supporting documents (like export invoices, proof of receipt of payment in convertible foreign exchange) are maintained.

**b. **Claiming Refunds:**
- **Input Tax Credit Refund:** As export of services is zero-rated, you can claim a refund of the input tax credit on the inputs and services used to provide these services. This can be claimed through the GST RFD-01 form.

### **4. Documentation and Compliance**

**a. **Documentation for Export:**
- Maintain detailed documentation including invoices, contracts, proof of receipt of payment in foreign currency, and evidence of the service being exported.
- Ensure proper records to support your zero-rated supply claims and refund applications.

**b. **Compliance:**
- Ensure timely filing of all returns and compliance with GST regulations to avoid penalties and ensure smooth processing of refunds.

### **Summary**

- **Registration:** Yes, registration under GST is compulsory since your turnover exceeds Rs. 20 lakhs.
- **Tax on Export of Services:** You will not charge GST on services provided to foreign clients (zero-rated), but you can claim a refund of the input tax credit.
- **Filing Returns:** File GSTR-1, GSTR-3B, and GSTR-9 as per GST requirements, and claim refunds for ITC on inputs used.

**Consultation with a GST practitioner** is recommended to ensure correct compliance, especially to handle specific documentation and refund claims related to zero-rated supplies.

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