GST for Freelancers: How Tax Compliance and a Current Account Build Credibility

Posted on Tuesday, September 23rd, 2025 | By IndusInd Bank

Freelancing in India isn’t just a side hustle anymore. It’s a thriving career path for designers, consultants, writers, developers, and independent professionals who want flexibility and control over their work. With platforms like Upwork, Fiverr, and LinkedIn opening global opportunities, many Indians are finding freelancing just as rewarding as a corporate role.

But here’s the catch: while freelancing gives freedom, clients (especially large corporates) expect structure. They want to know you’re serious, compliant, and reliable. That’s where two things come into play: GST for freelancers and having a dedicated Current Account. Together, they not only keep you on the right side of the law but also make you look more professional to potential clients.

Who is Considered a Freelancer in India According to GST?

From the GST perspective, anyone who provides services independently without being tied to an employer comes under the scope of GST. This includes professionals such as:

• Writers, designers, and photographers
• IT developers, consultants, and trainers
• Digital marketers and content creators
• Legal and accounting professionals

The key point is independence: you’re not drawing a salary; you’re offering professional services directly to clients.

Under GST law, freelancers fall under the category of “service providers.” This means GST rules apply to them in much the same way as they apply to small businesses or firms offering professional services.

So, if you’re freelancing, GST may apply to you depending on your income and the nature of your services.

GST on Professional Services: What Applies to Freelancers?

The concept of GST on professional services is straightforward: if you’re providing services in India and your annual aggregate turnover crosses the prescribed threshold, GST registration becomes mandatory.

• Threshold limit: If your annual turnover exceeds ₹20 lakh (₹10 lakh in special category states), GST registration is required.
• Export of services: Freelancers working with international clients are considered service exporters. Exports are zero-rated under GST, but you still need registration to claim benefits.
• Interstate clients: Interstate supply of services requires GST registration regardless of turnover. For exports, registration is mandatory only when aggregate turnover crosses the threshold.

This makes GST more than just a tax—it’s a compliance framework that signals to clients you are a structured service provider.

What are OIDAR Services under GST?

One term freelancers often come across is OIDAR (Online Information and Database Access or Retrieval Services). In simple terms, these are services delivered over the internet without much human intervention. Examples include:

• Online advertising services
• Cloud storage subscriptions
• Software-as-a-Service (SaaS) platforms
• Online courses or digital templates sold automatically

For freelancers, OIDAR matters if you’re selling digital products or providing services online to clients abroad. In such cases, GST registration and compliance rules may differ, and it’s important to classify services correctly to avoid penalties.

Also Read: How to Become a Mutual Fund Distributor in India: Roles, Steps, and the Importance of a Current Account

GST Rates Applicable on Freelancers

The GST rate for most professional services provided by freelancers is 18%. This applies whether you’re a consultant, designer, or IT professional.

Here’s a quick snapshot:

• IT, digital marketing, and consultancy services: 18%
• Photography and creative services: 18%
• OIDAR services: 18%

While the rate may look high, it’s important to remember that GST is a pass-through tax—you collect it from your client and remit it to the government. Proper invoicing makes the process smooth and transparent.

GST for Freelancers: Registration Steps

Registering for GST is simpler than it sounds. Here’s a step-by-step overview:

• Step 1: Visit the GST portal.
• Step 2: Click on “New Registration” and select “Taxpayer.”
• Step 3: Enter details like PAN, email, and mobile number.
• Step 4: Fill out business details (even as an individual freelancer, you’ll enter your trade name and nature of services).
• Step 5: Upload documents such as PAN, Aadhaar, bank account proof, and a photograph.
• Step 6: Submit the application and receive an Application Reference Number (ARN).
• Step 7: Once verified, you’ll get your GSTIN (GST Identification Number).

Once registered, you’ll be required to file GST returns regularly—usually monthly or quarterly depending on your chosen scheme.

Can Freelancers Apply for the GST Composition Scheme?

The GST Composition Scheme is designed for small businesses with turnover up to ₹1.5 crore. It offers lower tax rates and easier compliance.

However, freelancers cannot usually opt for this scheme. The scheme excludes service providers, with the exception of restaurants. That means if you’re offering professional services, you’ll need to follow the regular GST rules.

How GST Builds Trust and Professionalism for Freelancers?

For many freelancers, GST may feel like extra paperwork. But here’s the upside: it builds credibility.

• Corporate readiness: Big clients often prefer vendors with a GST number since it simplifies their compliance.
• Export benefits: If you’re working with overseas clients, GST registration allows you to access zero-rated export benefits.
• Professional invoicing: A GST-compliant invoice looks far more credible than an informal bill or email request for payment.

Think of GST not just as a tax but as a badge of professionalism. It shows you’re serious about your work and ready to scale.

Why Having a Current Account Makes Freelancers Look Structured?

Alongside GST, a Current Account is another must-have for freelancers. Why? Because mixing personal and business finances can quickly get messy.

Here’s how a Current Account helps:

• Separation of finances: Keeps personal expenses distinct from client payments and GST liabilities.
• Simplified GST compliance: Easier to track business-related inflows and outflows for filing returns.
• Professional client perception: Invoices linked to a business Current Account look more credible than those tied to a savings account.
• Higher transaction limits: Unlike savings accounts, Current Accounts are designed for frequent business transactions.

For example, imagine sending an invoice to a corporate client with payment instructions linked to a personal savings account. It doesn’t exactly scream “structured professional.” A Current Account, however, instantly positions you as a business-ready partner.

Common Mistakes Freelancers Make with GST and Banking

Many freelancers slip up not because they lack skills, but because they overlook compliance. Here are some common pitfalls:

• Ignoring GST registration even after crossing the turnover limit
• Mixing personal and client transactions in one account
• Forgetting to file GST returns on time, leading to penalties
• Issuing invoices without proper GST details
• Using savings accounts for high-frequency business payments

Avoiding these mistakes will not only save you money but also help you project a more reliable image to clients.

How GST + Current Account Together Create a Business-Ready Image?

Think of GST and a Current Account as two pillars of your freelancing business. One ensures tax compliance, the other ensures financial discipline. Together, they:

• Streamline invoicing and payments
• Make you eligible for bigger clients and projects
• Simplify audits and financial reporting
• Strengthen client trust

In today’s competitive freelancing landscape, these aren’t optional extras—they’re essentials for growth.

Future Outlook: More Freelancers, More Compliance, More Opportunity

India’s freelance economy is only getting bigger. Reports suggest millions of professionals are shifting to independent work each year. With this growth, compliance will naturally tighten. Corporates, especially, will look for structured freelancers who tick all the boxes: GST compliance, professional banking, and reliable delivery.

Freelancers who adopt GST early and maintain business-like banking practices will stand out in this crowded marketplace.

Final Thoughts

Freelancing gives you independence, but independence doesn’t mean informality. By understanding GST for freelancers and aligning with tax rules, you show clients you’re not just a creative professional—you’re a credible business partner. Add a dedicated Current Account, and you further strengthen that professional image, separating personal and business finances while making compliance smoother. If you’re serious about scaling your freelancing career, it’s time to see GST and a Current Account not as obligations, but as stepping stones to bigger opportunities.