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The Goods and Services Tax (GST) has affected every area of India’s economy, from large corporations to small and midsize businesses. Yes, even independent contractors are within its purview, although they may or may not be required to pay GST.

Even though you are exempt from GST as a freelancer, it is crucial to understand how GST works and indirect tax services in Pune can help you with it, since you will be required to register your firm under GST as it expands.

A freelancer is an individual who is not hired by anybody and is paid on a contractual basis by multiple customers to complete various short-term and long-term projects. In brief, a freelancer is a kind of service provider without an employer-employee connection, and the GST laws pertaining to service providers must apply to freelancers as well.

  • What is the GST registration threshold for a sole proprietor?

As a service provider, a freelancer is obligated to register for GST in the following circumstances:

When annual revenue crosses Rs 20 lakh during a fiscal year (For states other than the North-Eastern States)

For online information and database access and retrieval services (OIDAR services*).

*According to the GST Act, the following services qualify as OIDAR services:

Offer cloud-based services

Internet-based commercialism

Web-based gaming services

Internet provisions for the sale of e-books, music, movies, software, and other intangibles

Providing data or information, retrieval or otherwise, to any individual over a computer network

  • Can an independent contractor become a composite dealer?

According to the terms of the GST Act, no service provider may opt for the composition system. Exceptions to this regulation include service providers that provide restaurant services.

Therefore, a freelancer cannot choose the composition scheme.

To learn the advantages and disadvantages of the composition plan, you may read about the GST Composition Scheme.

  • What are the regulations for billing for freelancers?

Any invoice issued by a freelancer must comply with the GST. The invoice should include all pertinent information, such as the service provider’s and recipient’s names, addresses, GSTINs, the SAC of services, the date, the service’s value, and so on. 

  • Are independent contractors eligible for input tax credit?

Input tax credit (ITC) allows you to deduct the tax you’ve previously paid on purchases from the GST you owe on sales. 

  • What is the penalty for filing taxes late?

A Rs 200 late charge will be assessed.

Additionally, an interest rate of 18 percent per year will be assessed. This will be computed by the taxpayer on the amount of tax due.

If the tax has not been paid, a minimum fine of Rs 10,000 would be assessed.

The highest penalty for delinquent tax is 10% of the tax amount owed.

These were some meaningful information on GST for freelancers with the assistance of an indirect taxation company in Pune.

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