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Are You A Freelancer? Here’s Everything About Taxes, Contracts & Payments

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The arrival of the gig economy couldn’t have come at a better time. As people stay put at home, a little more time is saved on the day-to-day shuttle meaning a greater chance to look for freelance jobs in 2020. It is said that India has the largest freelance workforce after the United States of America, and that indicates the industry is packed with action and competition. Image: 123RF Now, as a freelancer, you provide services, and the government of India has determined that there are circumstances in which a freelancer is required to pay GST. Goods and Services Taxesâ¯is a compound tax that has replaced all the other types of taxes for clarity and simplicity. Yes, it applies to the services industry too. Freelancers are liable for IGST, CGST, or CGST, depending on the location of their clients. It’s important to remember that there is no exemption from GST. Even if you work solely with international clients, you still may be liable to pay GST. Image: 123RF So the first question most freelancers ask as beginners is how much GST would a freelancer charge? Since it is the replacement service tax for a freelancer, the GST charges will be at 18 per cent of the total bill amount. Every bill or invoice that you generate will need to have 18 per cent GST discernable on it. The next thing to understand is” Is GST registration necessary for a freelancer? Regardless of the nature of your services, GST registration for a freelancer depends on the following factors: – Annual revenue < 20 lacs – Registration not required. – Annual revenue > 20 lacs, irrespective of clients’ location in India – Registration required Only overseas clients and payment is via a foreign bank account, PayPal, or Western Union? Registration not required, notwithstanding your income threshold. Who Pays For GST Charges? Your clients will pay you, and in turn, you will pay the same to the government. Subsequently, clients can claim it as a tax credit when they file for taxes making it a win-win for every party. Do not pay for the GST charges yourself, even if your clients ask for a concession, because you will pay it and your clients, nonetheless, will get a tax credit for it. What Is The Process Of Filing GST Returns? GST returns need to be filed quarterly or monthly based on the revenue, and if you have chosen the composition scheme. Composition sellers or dealers and those with annual sales less than Rs.1.5 crore can file quarterly returns. Once you acquire a GST Identification number, filing GST returns is mandatory for you. Image: 123RF Importance Of Agreements/Contracts Many a time, a freelancer’s work is considered to be the client’s work or attempted to be stolen, thus taking away the freelancer’s right to get credit – both in terms of acknowledgement and payments. A freelancer must always bear in mind that they have copyright over each of their creations. Only you can choose who […]

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