Most freelancers meet GST the same way: a client asks for a GSTIN, or the year's billing quietly crosses a number nobody was tracking. The ₹20 lakh figure is well known. What catches people is that the Act has a second door into registration that does not look at turnover at all — and a monthly foreign software bill can be enough to open it.
# The threshold, stated properly
| Threshold | Applies to | |
|---|---|---|
| Services — most States | ₹20 lakh | Freelancers, consultants, designers, developers, writers |
| Services — Manipur, Mizoram, Nagaland, Tripura | ₹10 lakh | Same, in those four States |
| Goods | ₹40 lakh | Not you, unless you also sell goods |
Three things about aggregate turnover that change the arithmetic:
- It is computed PAN-wise across India, not per client, per State or per GSTIN.
- It includes exempt supplies and exports, not only taxable billing. Someone invoicing only US clients still accumulates turnover.
- It is measured on the financial year, and liability arises when you cross, not when you notice.
# Where turnover stops mattering — section 24
Section 24 lists categories that must register "notwithstanding" the threshold. Four matter to a freelancer:
| Category | How it actually works |
|---|---|
| Liable to pay under reverse charge — s.24(iii) | No threshold. The trap explained in the next section |
| Inter-State supply — s.24(i) | For services, Notification 10/2017-Integrated Tax exempts you up to the threshold. Not an automatic trigger |
| Supply through an e-commerce operator | Notification 65/2017-Central Tax exempts a service supplier below the threshold — except for section 9(5) services (cab, accommodation, housekeeping type platforms), where the platform pays and separate rules apply |
| Casual / non-resident taxable person | Relevant if you take up a short assignment in a State where you have no fixed place of business — for example a training stint or an exhibition |
# The foreign-tool rule, in one table
This is the part worth ten minutes of anyone's time. The question is not "is it a foreign bill" but what kind of service it is, and whether you are registered.
| Your position | What you buy from abroad | Who pays GST |
|---|---|---|
| Unregistered | OIDAR — cloud software, hosting, storage, online ads, automated subscriptions | The foreign supplier. Since 1 October 2023 an unregistered recipient is a "non-taxable online recipient"; the supplier registers in India and charges GST. Nothing for you to do — and no registration trigger |
| Unregistered | Not OIDAR — a foreign consultant, an overseas agency, a contractor abroad, anything with real human involvement | You, under reverse charge — and s.24(iii) then makes registration compulsory, whatever your turnover |
| Registered | Any import of services, OIDAR or not | You, under reverse charge at 18%, with ITC available where it is for business |
| Any | Non-OIDAR service imported for purely personal use | Exempt under Notification 9/2017-Integrated Tax (Rate), entry 10 |
Two practical consequences:
- Check your invoices, not your assumptions. If the vendor's India invoice already shows GST and a GSTIN, that is the OIDAR route and the tax is handled. If it shows no GST and the work involved a human being at the other end, you are in reverse-charge territory.
- Reverse charge is paid in cash. It cannot be set off against input tax credit. You also have to raise a self-invoice under section 31(3)(f) and show the liability in Table 3.1(d) of GSTR-3B. The credit comes back the same month if the expense is for business, so the cost is usually timing, not tax — but the compliance is real.
# Foreign clients: zero-rated, but only if it qualifies
An export of services under section 2(6) of the IGST Act needs all five conditions:
- Supplier in India
- Recipient outside India
- Place of supply outside India
- Payment received in convertible foreign exchange, or in rupees where the RBI permits
- Supplier and recipient are not merely two establishments of the same person
Meet them and the supply is zero-rated — file an LUT (Form GST RFD-11) at the start of each financial year and bill without IGST. Miss the LUT and you must pay IGST on the invoice and chase a refund.
# Once you are registered
- Rate: 18% on nearly all professional, consulting, IT, design and writing work, unchanged by the GST 2.0 restructuring of 22 September 2025. See GST 2.0 — the four-slab structure explained.
- SAC code: pick the specific one — 998313 information technology consulting, 998314 IT design and development, 998311 management consulting, 998391 specialty design, 998599 other support services. The wrong code follows you into every return and every departmental query.
- Returns: GSTR-1 and GSTR-3B, monthly or under QRMP if turnover is up to ₹5 crore. A NIL month still needs a return — late fee applies to nil filings too.
- Registration speed: Rule 14A now grants registration in three working days where Aadhaar authentication succeeds — see GST registration in 3 days under Rule 14A.
# The composition scheme, and why it usually fails for freelancers
Section 10(2A) offers a flat 6% (3% CGST + 3% SGST) up to ₹50 lakh. It reads well until the conditions are applied:
| Condition | Effect on a freelancer |
|---|---|
| No inter-State outward supply | Fatal for most — one client in another State and you are ineligible |
| No input tax credit | Your laptop, software and co-working GST become pure cost |
| Bill of supply, not a tax invoice | Corporate clients lose ITC on your fee, and some will not engage you |
| Cannot supply through a TCS-collecting e-commerce operator | Rules out platform work |
Full comparison: Composition scheme — rates, eligibility and CMP-08.
# Should you register voluntarily?
| Register voluntarily when | Stay unregistered when |
|---|---|
| Your clients are GST-registered companies who want ITC on your fee | Your clients are individuals or small unregistered businesses |
| You spend meaningfully on GST-bearing inputs — equipment, software, co-working, professional fees | Your costs are small and mostly outside GST |
| You export and want refunds of input tax | You are far from the threshold and the filing overhead is not worth it |
| You are close to the threshold anyway | — |
For a B2C freelancer, registration adds 18% to the client's cost or eats your margin. For a B2B freelancer, the 18% is usually neutral to the client and the ITC is yours to keep.
# The five mistakes that cost real money
- Registering after the fact. Liability starts from the day you crossed, with 18% interest under section 50 — not from the day you applied.
- Ignoring reverse charge on imported services, then discovering it in a departmental notice with interest attached.
- Skipping NIL returns in quiet months. Late fee accrues on nil returns, and enough pending returns eventually block e-way bills and fresh filings.
- Claiming ITC on personal spends — the personal phone bill, family travel — which is exactly what reconciliation exercises surface.
- Forgetting exports in aggregate turnover, and so believing the threshold has not been crossed.
Income tax runs on its own track: presumptive taxation under section 44ADA has no connection to GST registration. Being under 44ADA does not exempt you from GST, and registering for GST does not disturb 44ADA.
# What to do today
- Add up this year's billing PAN-wide — Indian clients, foreign clients, exempt work, everything.
- Open your last three months of foreign payments and sort them into OIDAR (invoice already shows GST) and non-OIDAR (it does not).
- If any non-OIDAR import is for your business — treat registration as compulsory and act now, not at year end.
- If you bill foreign clients — check the five export conditions and file your LUT for FY 2026-27.
- If you are close to ₹20 lakh — decide before you cross, not after; Rule 14A takes three working days.
- Unsure which side of the OIDAR line a vendor sits on? Take it to a CA with the invoice, not with a guess.
Work out the tax on your own billing with the VittSphere ONE GST Calculator — GST 2.0 slabs, inclusive and exclusive, CGST/SGST and IGST splits.
Educational content, current as at 21 September 2026 and based on the CGST and IGST Acts, the notifications named above and CBIC material. It is general in nature and not advice on your specific facts — particularly on reverse charge, OIDAR classification and export qualification, where the outcome turns on the exact service, the supplier and the place of supply. Have your own position confirmed by a Chartered Accountant.
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Frequently asked questions
What is the GST registration threshold for a freelancer in 2026?
₹20 lakh of aggregate turnover in a financial year for a supplier of services in most States, and ₹10 lakh in Manipur, Mizoram, Nagaland and Tripura. The ₹40 lakh figure people quote is for suppliers of goods and does not apply to freelance or consulting services. Aggregate turnover is computed PAN-wide across India and includes exempt supplies and exports, not just your taxable billing.
Does an out-of-State client force me to register even below ₹20 lakh?
No, and this is the single most repeated error in freelancer content. Section 24(i) makes inter-State supply a compulsory-registration category, but Notification No. 10/2017-Integrated Tax exempts a person making inter-State supplies of taxable services from that requirement as long as aggregate turnover stays within the threshold. For goods there is no such exemption. So a Pune designer billing a Bengaluru client at ₹12 lakh a year does not have to register on that ground.
Why can paying for a foreign tool make registration compulsory?
Because section 24(iii) requires registration, without any threshold, from a person who is liable to pay tax under reverse charge. Where you import a service for your business from a supplier outside India and reverse charge applies to it, you become such a person. The turnover you earn is then irrelevant.
Does that mean every foreign software subscription triggers it?
No. Since 1 October 2023, where the service is OIDAR — a subscription delivered online with essentially no human involvement, such as cloud software, hosting or online advertising — and you are not registered, you are a "non-taxable online recipient". The foreign supplier is the one required to register in India and charge GST, not you. That is why Google, Adobe, Zoom and similar vendors add GST on Indian invoices. Reverse charge bites where the imported service is not OIDAR, for example a foreign consultant, an overseas agency or a designer you engage abroad — and it bites on all imports once you are registered.
I only bill foreign clients. Is my income outside GST?
Not automatically. A supply qualifies as an export of services only if all the conditions of section 2(6) of the IGST Act are met, including receipt of payment in convertible foreign exchange (or in rupees where the RBI permits) and the recipient not being merely another establishment of the same person. Exports are zero-rated, not exempt, and they count towards aggregate turnover — so you can cross ₹20 lakh with foreign clients alone and become liable to register.
What is the LUT and do I need one?
A Letter of Undertaking in Form GST RFD-11, filed on the portal for each financial year. With an LUT a registered exporter supplies without paying IGST upfront. Without one, IGST has to be paid on the export invoice and claimed back as a refund, which locks up working capital for months.
Is the 6% composition scheme worth it for a freelancer?
Rarely. Section 10(2A) allows a flat 6% for service providers up to ₹50 lakh, but a composition taxpayer cannot make inter-State outward supplies, cannot claim input tax credit and issues a bill of supply instead of a tax invoice. Most freelancers bill clients in other States, which rules the scheme out at the first condition.
What is the cost of registering late?
Liability runs from the date you became liable, not from the date you finally registered. That means GST on the intervening turnover out of your own pocket if it was never charged to clients, interest at 18% per annum under section 50, and penalty exposure under section 122. Registration itself is now quick — Rule 14A grants it in three working days where Aadhaar authentication succeeds.