GST for Freelancers Billing Indian and Foreign Clients

A freelancer in India needs GST registration once aggregate turnover crosses the threshold that applies to services, and — quite separately from turnover — the moment they become liable to pay tax under reverse charge or supply through certain platforms. Working for foreign clients does not by itself create that liability. Once registered, an export of services that satisfies all five conditions in section 2(6) of the IGST Act is zero-rated, which means you charge nothing on the invoice and, with a Letter of Undertaking on file, pay nothing either.

When a freelancer actually has to register

Registration under GST is driven by aggregate turnover, computed across all supplies made on the same PAN on an all-India basis. For a person supplying only services, the threshold is the lower of the two headline figures in section 22 of the CGST Act: the higher limit introduced later applies to suppliers engaged exclusively in the supply of goods, and a freelancer is by definition not in that group. In the special category states, the threshold drops lower still. Because these figures have been revised and are state-specific, treat the structure as the stable part and check the current amounts on the GST portal or in the relevant notification. Our guide to the GST registration turnover limit sets out how the two tiers interact.

Two details catch people out. First, aggregate turnover includes exempt supplies and exports, not just taxable domestic billing — so a freelancer whose entire client list is abroad is still accumulating turnover towards the threshold. Second, the test is on the PAN, so a person running a small consulting practice alongside rental income or another proprietary business adds those figures together. If you are unsure how your own number is being computed, our note on annual aggregate turnover explains what goes in and what stays out.

Crossing the threshold starts a clock rather than a conversation: you are expected to apply within thirty days of becoming liable. The online registration process is a two-part form on the portal with Aadhaar authentication, and for a proprietor with a clean PAN it is usually quick.

The rules that force registration regardless of turnover

Section 24 of the CGST Act lists categories of person who must register irrespective of turnover. Three of them matter to freelancers, and one of the three is almost universally misunderstood.

Inter-state supply: not a trap for services

Section 24(i) makes any person making an inter-state taxable supply liable to register with no threshold. Read literally, that would mean a Pune designer billing a Bengaluru client — or a client in New York — needs a GSTIN on day one. It does not, because the Council recognised the absurdity almost immediately and issued a notification in 2017 exempting persons making inter-state supplies of taxable services from compulsory registration, provided aggregate turnover stays below the threshold. The relief covers ordinary inter-state work and exports alike. It does not extend to inter-state supplies of goods, which is why the myth survives: the rule genuinely is different for a person shipping products.

Supplying through an electronic commerce operator

Section 24(ix) requires registration by a person who supplies through an electronic commerce operator that is obliged to collect tax at source. A later notification relieved small service suppliers here too, but the relief is narrower than the inter-state one: it does not reach the specific service categories notified under section 9(5), where the operator itself is made liable to pay the tax on the supply. Platforms also impose their own onboarding requirements, and many simply will not enrol an Indian service provider without a GSTIN. Check the platform terms and the current text of the notification rather than assuming relief.

Reverse charge liability

Section 24(iii) requires registration by any person liable to pay tax under reverse charge, with no threshold at all. This is the trap that catches freelancers, because it is triggered by what you buy, not what you sell. Import of services for business purposes — a foreign design tool, an overseas cloud subscription, a marketplace commission deducted by a company outside India — is generally taxable in the hands of the Indian recipient under reverse charge. Legal services taken from an advocate work the same way. Our explainer on the reverse charge mechanism sets out which supplies are notified. The practical point is that a freelancer with no Indian clients at all can still be pulled into registration by a monthly software bill.

Voluntary registration: an asset or a pure cost

Section 25(3) lets anyone register voluntarily, and a voluntarily registered person is treated exactly like a compulsorily registered one — same returns, same deadlines, same penalties for missing them.

It is worth doing when a client requires it. Indian companies with a formal vendor process frequently refuse to onboard suppliers without a GSTIN, partly because they want input tax credit on your fee and partly because their accounts payable controls are built around verified vendors. It is also worth doing when you have real input tax to recover: a laptop, a monitor, software subscriptions from Indian vendors, coworking rent and professional fees all carry GST, and a registered exporter operating under an LUT accumulates that credit and can claim it back through the refund process.

It is a pure cost in the opposite case. If your clients are individuals or small businesses who cannot use the credit, registering means adding 18% to your price or absorbing it out of your margin. If your inputs are trivial — a laptop every four years and a broadband bill — the credit you recover will not cover the time or the accountant. And the compliance is permanent: two returns per period, nil returns when you have no work, and a cancellation process to go through if you later want out. Register when a client, a credit position or a platform makes it useful; not on the theory that it looks more professional.

Export of services: the five conditions that must all hold

This is the heart of the question for most freelancers, and the law is unusually precise about it. Section 2(6) of the IGST Act defines export of services as the supply of any service where all of the following are satisfied:

1. the supplier of the service is located in India;
2. the recipient of the service is located outside India;
3. the place of supply of the service is outside India;
4. payment has been received by the supplier in convertible foreign exchange, or in Indian rupees wherever permitted by the Reserve Bank of India; and
5. the supplier and the recipient are not merely establishments of a distinct person.

Satisfy all five and the supply is zero-rated under section 16 of the IGST Act. Zero-rated is not the same as exempt: an exempt supply blocks the input tax credit attributable to it, while a zero-rated supply preserves that credit and lets you recover it. Fail any one condition and the supply is not an export at all — it becomes an ordinary taxable supply, generally at 18% for professional and IT services, and if you never charged the client, the tax comes out of your own margin along with interest.

The intermediary problem

Condition three is where exports usually break. The default place-of-supply rule for cross-border services in section 13(2) is the location of the recipient, which puts the place of supply outside India and keeps the export intact. Section 13(8) carves out exceptions where the place of supply is instead the location of the supplier — and one of them is intermediary services. If you are an intermediary, the place of supply of your service is your own address in India, condition three fails, and you are making a domestic supply to a foreign client.

Section 2(13) defines an intermediary as a broker or agent who arranges or facilitates a supply between two or more persons, but expressly excludes a person who supplies the service on their own account. A CBIC circular issued in 2021 set out the practical tests: there must be at least three parties and two distinct supplies, the person must have the character of an agent rather than a principal, and sub-contracting is not intermediation. A developer writing code for a foreign company is supplying on their own account and is not an intermediary. A person who sources Indian manufacturers for a foreign buyer and takes a commission usually is. The provision has been challenged in the High Courts without a settled outcome, so plan around the text as it stands. Our guide to the place of supply rules works through the section 13 exceptions in more detail.

The same-entity problem

Condition five stops a business from exporting to itself. Explanation 1 to section 8 of the IGST Act treats an establishment in India and an establishment outside India as establishments of a distinct person, so a branch, liaison or project office in India billing its own head office abroad is not exporting. A CBIC circular has clarified that a company incorporated in India and its foreign holding company are separate legal persons, not establishments of one person, so a genuine subsidiary billing its parent can still export. The line follows legal personality, not organisational reality: if the Indian and foreign sides are the same legal entity, condition five fails.

Two export routes, and why the LUT wins

Section 16 of the IGST Act gives a zero-rated supplier a choice of two routes, and for freelancers the choice is not close.

Under the first route you furnish a Letter of Undertaking in Form GST RFD-11 on the portal, normally once for each financial year, and then invoice foreign clients without charging IGST. Nothing leaves your bank account. Whatever input tax credit accumulates on your costs can be claimed back later, or simply left to sit if the amount is too small to be worth a refund application. Filing the LUT takes a few minutes and costs nothing; the main disqualification is prosecution for a tax offence above a notified amount, which will not apply to an ordinary freelancer. Our LUT filing guide covers the form field by field.

Under the second route you charge IGST on the export invoice, pay it in cash, and then apply for a refund of the tax paid. For export of services this means a full RFD-01 application supported by evidence that the foreign exchange has actually arrived. It works, but it converts every invoice into an interest-free loan to the government for the length of the refund cycle. There is no upside for a small service business, which is why the sensible sequence is to register, file the LUT, and only then raise the first foreign invoice.

The paperwork behind a foreign invoice

A zero-rated invoice is only as good as the evidence behind it, and four items do most of the work.

Proof of foreign exchange. Condition four is proved by a Foreign Inward Remittance Certificate or advice from your authorised dealer bank, or by an electronic Bank Realisation Certificate generated through the DGFT platform. Ask your bank to issue the certificate against each remittance and file them alongside the invoices; Rule 89 requires this evidence for a refund claim, and an assessing officer looking at an export position years later will ask for it. Payment routed through a wallet or a payment platform that never produces a bank certificate is a genuine problem, not a formality — insist on a remittance that your AD bank can certify.

The invoice endorsement. Rule 46 requires an export invoice to carry an endorsement stating whether the supply is made on payment of integrated tax or under bond or Letter of Undertaking without payment of integrated tax, together with the recipient's name, address and country and the delivery address. The wording is prescribed; use it verbatim. Our invoice format guide lists the other mandatory fields, including the consecutive serial number limited to sixteen characters.

The SAC code. Services are classified under Chapter 99. Use the six-digit code that describes what you deliver and keep it consistent between the invoice and GSTR-1. Detailed breakdowns are in our notes on SAC codes for software services and SAC codes for consultancy services.

The place-of-supply field. On a domestic invoice this is a state; on an export invoice it is the recipient's country, and the portal and the e-invoice schema represent that with a dedicated code rather than a state code. Reporting an export in the wrong table, or with an Indian state in the place-of-supply field, is one of the more common reasons an otherwise valid zero-rated supply looks like a short payment when the returns are reconciled.

Billing Indian clients: rate, SAC, TDS and returns

Domestic work is simpler. Most professional, technical and IT services attract 18%, split as CGST and SGST when you and the client are in the same state and charged as IGST when you are not. Rates are notified and do move, so confirm the current rate for your SAC before you print it on an invoice.

Indian company clients will usually deduct tax at source on your fee under section 194J of the Income-tax Act. That is an income-tax deduction, entirely separate from GST TDS under section 51 of the CGST Act, which applies only where the recipient is a government department, a local authority or another notified deductor. The two have different rates, different returns and different credit mechanisms — income-tax TDS appears in your Form 26AS and is set off against income tax, while GST TDS appears in your electronic cash ledger. The Board has also clarified that income-tax TDS is computed on the fee excluding GST where the tax is shown separately on the invoice, which is a good reason to show it separately.

On returns, a registered freelancer files GSTR-1 with invoice-level outward supplies and GSTR-3B as the summary and payment return. Below the notified turnover ceiling you can instead opt into the QRMP scheme and file both quarterly, paying by challan in the first two months of the quarter. For a freelancer with a handful of invoices a month, QRMP cuts the filing count from twenty-four to eight a year and is usually the right default. Nil returns are still mandatory in a month with no work.

Upwork, Fiverr and the platform questions

Platform income raises three separate questions, and conflating them is where most confusion starts.

The first is who your recipient is. If the platform merely facilitates and your contractual customer is the end client, then the export test is applied to that client: a client outside India paying in convertible foreign exchange gives you a zero-rated export, and a client in India gives you a domestic supply at 18% even though the money arrived through a foreign platform. If the platform contracts as principal and buys your service to resell, the platform is your recipient and its location governs. Read the platform terms rather than guessing from the payout screen.

The second is whether the platform is an electronic commerce operator for section 24(ix) purposes and whether the notified relief for small service suppliers reaches you. This is the registration question, and it is answered by the notification and the platform terms together, not by turnover alone.

The third is the commission. When a platform outside India deducts a service fee from your earnings, that fee is an import of services into India, and the reverse charge liability sits with you. It is a small amount on each transaction and easy to overlook, but it is both a tax to pay and — under section 24(iii) — a registration trigger in its own right. You are not an intermediary in this arrangement; the platform is. You supply on your own account.

A first-year checklist

The sequence below is the one that avoids retrospective problems. Work through it in order rather than fixing things after the first invoice has gone out.

1. Compute aggregate turnover across your whole PAN, including exports and exempt income, and compare it against the current services threshold for your state.
2. Check the reverse charge position on what you buy — foreign subscriptions, platform commissions, legal fees — because that can compel registration before turnover does.
3. If you register, complete Aadhaar authentication and get the GSTIN before raising the first invoice under it.
4. File the LUT in Form RFD-11 immediately after registration and again at the start of each financial year, before any export invoice is raised.
5. Set the invoice template up once: consecutive serial number, correct SAC, the Rule 46 export endorsement, the foreign place-of-supply code and a separate GST line for domestic clients.
6. Open a bank arrangement that produces a FIRC or e-BRC for every inbound remittance, and file the certificate against the invoice as it arrives.
7. Choose monthly filing or QRMP deliberately, and diarise the dates — including nil returns.
8. Track export invoices against the one-year realisation window under Rule 96A, and chase anything approaching it.
9. Reconcile input tax credit each quarter, and decide once a year whether the accumulated credit is large enough to justify a refund application.

Doing all nine takes an afternoon at the start and a couple of hours a quarter afterwards. Doing them out of order — most commonly raising foreign invoices before the LUT exists — is what turns a zero-rated practice into an unbudgeted 18% liability.

Frequently asked questions