A question we answer for freelancers and consultants every month, posted here by the TAXAJ team.
A designer or developer in India works only for clients abroad and is paid in dollars. Turnover this year will be about ₹14 lakh. Is GST registration compulsory, and what changes if turnover crosses ₹20 lakh?
Below the threshold, registration is not compulsory. For service providers the limit is ₹20 lakh of aggregate turnover in a financial year (₹10 lakh in the special category states of Manipur, Mizoram, Nagaland and Tripura). Export of services counts towards aggregate turnover, so the ₹14 lakh in the example is under the limit.
Inter-state supply of services does not, on its own, force you to register below the limit.
Once turnover crosses ₹20 lakh, register within 30 days. Exports can then go out without paying IGST under a Letter of Undertaking (LUT), filed once each financial year on the GST portal. A supply counts as an export only if:
- the client is outside India and so is the place of supply,
- you are paid in convertible foreign exchange (or in rupees where RBI permits), and
- you and the client are not just two establishments of the same person.
Some freelancers register voluntarily below the limit to claim input tax credit on laptops and software. That is a choice, not a requirement. More detail in GST on online services to foreign clients, or ask us about GST registration.