If you’re a freelancer, consultant or a small agency, GST rules apply to you differently from a shop or a manufacturer — the threshold is lower, the rate is almost always 18%, and if you bill foreign clients there’s a valuable zero-tax route most people miss. This guide covers when you actually need to register, what rate and SAC code to put on your invoice, how to bill overseas clients GST-free, which expenses give you input tax credit, the little-known 6% composition option for small local practices, and how filing works.
At a glance
- Register at ₹20 lakh aggregate turnover (services), or ₹10 lakh in specified special-category states — not the ₹40 lakh goods figure.
- Rate: professional, consulting, IT and design services are almost all 18% (9% CGST + 9% SGST within your state, 18% IGST across states).
- Exports are zero-rated: billing a foreign client is 0% GST if you meet five conditions — file an LUT to export without charging IGST.
- Input tax credit is available on genuine business inputs (laptop, software, internet, co-working) but blocked on personal items, food and motor vehicles.
- Small local practices can opt for a flat 6% composition (up to ₹50 lakh) — but not if you bill inter-state, export, or sell through a platform.
- Position for FY 2026-27. Confirm your state’s threshold and your exact SAC before billing.
Do you even need to register?
A freelancer or consultant supplies services, so the registration threshold is ₹20 lakh aggregate turnover in a financial year (₹10 lakh in specified special-category states) — not the ₹40 lakh limit that applies to goods. Until you cross it, registration is optional.
The point most freelancers get wrong: billing a client in another state does not force you to register. Inter-state supply of services is relieved up to ₹20 lakh (Notification 10/2017-Integrated Tax) — only inter-state supply of goods triggers mandatory registration from the first rupee. So a Bengaluru designer invoicing a Mumbai client can stay unregistered until ₹20 lakh. (For the full registration rules, see our GST Registration for Startups guide.)
What rate and SAC code to put on your invoice
Nearly all professional and creative services fall in the 18% slab. Within your own state that is split 9% CGST + 9% SGST; for a client in another state it is 18% IGST. Your invoice must also carry the correct SAC (Services Accounting Code) — the service equivalent of an HSN code:
| Service | Common SAC | GST |
|---|---|---|
| IT / software development | 998314 | 18% |
| Management / business consulting | 998311 / 998312 | 18% |
| Advertising & marketing | 998361 | 18% |
| Graphic / UI-UX / design | 998391 | 18% |
| Accounting, audit & bookkeeping | 998222 | 18% |
| Other professional & content services | 998399 | 18% |
SAC codes don’t change the 18% rate for these services, but the right code must still appear on the invoice. If you’re unsure, look up your exact SAC before billing.
Billing foreign clients: the zero-tax route
This is the most valuable rule for freelancers who work with overseas clients. A service to a foreign client is an export of service, which is zero-rated (0% GST) — provided all five conditions of Section 2(6) of the IGST Act are met:
- the supplier (you) is located in India;
- the recipient is located outside India;
- the place of supply is outside India;
- payment is received in convertible foreign exchange (or in INR where the RBI permits); and
- you and the client are not merely two establishments of the same person.
When these are met, you have two ways to handle the GST:
- LUT route (recommended): file a Letter of Undertaking once a year and export without charging IGST — no tax blocked in your working capital. An LUT is valid for one financial year only; you must file a fresh one before 1 April each year (an export made after your LUT expires is not treated as zero-rated).
- Pay-and-refund route: charge IGST, then claim a refund. This ties up cash until the refund is processed, so most exporters use the LUT.
Either way, because exports are zero-rated (not exempt), you still get to claim input tax credit on your business inputs and can seek a refund of it — a genuine benefit, not just a formality.
What input tax credit can you claim?
Once registered, you can offset the GST you pay on genuine business purchases against the GST you collect. Typical claimable inputs for a freelancer or agency include:
- Laptops, monitors and work equipment
- Software and SaaS subscriptions used for the work
- Internet, phone and co-working / office rent
- Professional tools, stock assets, and subcontractor invoices (with GST)
But Section 17(5) blocks credit on several things regardless of business use — notably personal expenses, food and beverages, club memberships, and motor vehicles (unless the vehicle is itself part of your taxable business). Claiming credit on a personal restaurant bill or a car is a common trigger for notices.
The 6% composition option for small local practices
If your practice is small and purely local, there is a simpler alternative to regular GST. Under Notification 02/2019-Central Tax (Rate), a service provider with turnover up to ₹50 lakh in the previous year can opt for a flat 6% composition (3% CGST + 3% SGST) on turnover. The trade-offs:
- You pay a flat 6% and file simpler quarterly returns, but you cannot claim any input tax credit.
- You cannot collect GST from clients and must issue a Bill of Supply, not a tax invoice.
- You cannot make inter-state supplies, cannot export, and cannot supply through an e-commerce operator.
Because of the inter-state and export restrictions, composition suits only freelancers whose clients are all within their own state. If you bill other states or work with foreign clients, regular registration (with LUT for exports) is the right path.
How you file
- Regular registration: file GSTR-1 (your outward supplies) and GSTR-3B (summary + tax payment) — monthly, or quarterly under the QRMP scheme if your turnover is up to ₹5 crore.
- Composition: pay quarterly via CMP-08 and file the annual GSTR-4.
- Even in a month with no income, a registered freelancer must file a nil return — skipping it attracts late fees.
Common mistakes to avoid
- Assuming the ₹40 lakh limit applies — for services it’s ₹20 lakh.
- Charging IGST on foreign-client invoices without an LUT, then locking up that cash — file the LUT and bill at 0%.
- Letting the LUT lapse on 1 April — exports after expiry lose zero-rating.
- Claiming ITC on personal or blocked expenses (food, car, club).
- Choosing composition while having inter-state or foreign clients — that’s not allowed under the scheme.
- Skipping nil returns in lean months.
Frequently asked questions
Q: When does a freelancer need to register for GST? A: On crossing ₹20 lakh aggregate turnover (₹10 lakh in specified special-category states). Inter-state service clients don’t force earlier registration.
Q: How much GST do I charge? A: 18% for most professional/consulting/IT/design services — 9% CGST + 9% SGST within your state, or 18% IGST for another state.
Q: I only have foreign clients — do I charge GST? A: No. Export of services is zero-rated if the five Section 2(6) conditions are met. File an LUT to bill at 0% without blocking working capital.
Q: Can I claim GST on my laptop and software? A: Yes, if you’re registered and they’re used for the business. You cannot claim on personal expenses, food, club fees or (usually) a car.
Q: Is the 6% composition scheme good for freelancers? A: Only if all your clients are within your own state. It bars inter-state supplies, exports and e-commerce, and you can’t claim ITC or collect GST.
Q: Do I file returns even with no income? A: Yes — a registered person must file a nil return every period, or face late fees.
Send a compliant service invoice in seconds
Our free GST Invoice Generator creates professional service invoices with your SAC code, the correct 18% split (CGST/SGST or IGST), and the fields that make an export invoice LUT-ready — add your details once and they auto-fill on every bill. Local, inter-state or overseas, you can raise a compliant invoice (or a Bill of Supply) in under a minute, free and with no sign-up needed to start.