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| Does a Freelancer Need GST in 2025? (Limits, Inter-State Rules & Exemptions) |
Introduction
Are you a freelancer earning ₹15 Lakhs a year but losing sleep because your client is in Bangalore and you are in Delhi? You’ve probably heard the rumor: "If you sell outside your state, you MUST register for GST, even if you earn ₹1."
Stop worrying. That rule changed years ago.
In this 4-part series, we are going to demystify GST for freelancers in 2025. By the end, you’ll know exactly how to stay compliant without paying a penny more than necessary.
- Part 1: Do You Actually Need GST? (You are here)
- Part 2: How to Pay 0% Tax on Foreign Clients (LUT Guide)
- Part 3: Filing Guide: GSTR-1, 3B & The New GSTR-1A
- Part 4: Expense Hacking: Claiming ITC on Your Laptop & Lunch
1. The Golden Rule: The ₹20 Lakh Limit
For 90% of freelancers in India (Service Providers), the magic number is ₹20 Lakhs.
If your "Aggregate Turnover" in a financial year is less than ₹20 Lakhs, you generally do not need to register for GST. You can simply bill your clients using your PAN card.
What counts as "Turnover"?
It is not just your profit. It is your Total Revenue before expenses.
- Freelance Income: ₹12 Lakhs
- Rental Income from a flat: ₹6 Lakhs
- Total Turnover: ₹18 Lakhs (No GST needed yet).
⚠️ Exception: The "Special Category" States
If you reside in any of the following states, your limit is reduced to ₹10 Lakhs:
- Manipur, Mizoram, Nagaland, Tripura.
(Note: States like Assam, Arunachal Pradesh, and Meghalaya often follow the ₹20L limit for services, but always check your local state notification).
2. The "Inter-State" Myth (Busted)
This is the #1 reason freelancers register unnecessarily.
- The Old Law: "If you provide services to a client in a different state, you must register immediately, even if turnover is ₹1."
- The Current Law (2025): You are EXEMPT from this rule if your turnover is below ₹20 Lakhs.
This relief comes from Notification No. 10/2017-Integrated Tax. It specifically exempts service providers making inter-state supplies from obtaining registration if their aggregate turnover is less than ₹20 Lakhs.
Scenario: You are a graphic designer in Mumbai (Maharashtra). You land a big project with a client in Bengaluru (Karnataka) for ₹5 Lakhs.
- Your Total Turnover: ₹5 Lakhs.
- Verdict: You DO NOT need to register. You can legally invoice them without GST.
3. Voluntary Registration: Should You Do It Anyway?
Even if you don't have to register, should you? Here is the trade-off.
|
Pros (Why Register?) |
Cons (Why Wait?) |
|---|---|
|
Professionalism: Corporate clients prefer GST invoices. |
Compliance Burden: You must file returns (GSTR-1 & 3B) monthly/quarterly even if income is Zero. |
|
Claim ITC: Buying a ₹2 Lakh MacBook? You can get ~₹36,000 back as credit. |
Blocked Cash: You must collect 18% from clients and pay it to the Govt. |
|
Global Ready: Mandatory if you want to export services properly (See Part 2). |
Penalties: Late filing fees start at ₹50/day. |
4. The 2025 Registration Checklist
Ready to take the plunge? You don't need a CA to register. You can do it yourself on the GST Portal. Here is exactly what you need to keep ready:
- PAN Card: (Personal PAN is fine for Sole Proprietorship).
- Aadhaar Card: Linked to your mobile number for OTP verification.
- Passport Size Photo: (JPEG format, under 100KB).
-
Proof of Business Address:
- Own House: Electricity Bill + Property Tax Receipt.
- Rented House: Rent Agreement + Electricity Bill + NOC (No Objection Certificate) from the landlord.
- Expert Tip: The NOC is where most applications get rejected. Ensure it specifically states the landlord has "no objection to the tenant running a business."
- Bank Proof: Cancelled Cheque or First page of Passbook.
What’s Next?
So, you’ve decided to register (or you’re forced to because you crossed ₹20 Lakhs). Now comes the tricky part: Foreign Clients.
Did you know if you invoice a US client incorrectly, you might be liable to pay 18% GST out of your own pocket?
In the next article, I’ll show you the "LUT Secret" to paying 0% tax on foreign income.
👉 Read Part 2: How to Pay 0% GST on Foreign Income (The LUT Guide)