This is a detailed guide on GST (Goods and Services Tax) and how it will impact Indian bloggers as well as other freelancers.
The freelance industry in India is an unorganized sector, lacking transparent rules and regulations. The Indian freelance industry comprises of professional freelancers, bloggers, consultants and independent professionals. Although the Indian freelance industry is still in a growing phase, India has become the hub of passionate bloggers and freelancers.
Starting from travel to technology, and from food to fashion, blogging began as a platform for individuals to express their views and share experiences. However, with time, blogging has become one of the most paid sectors among the freelance industry.
GST for Bloggers and Freelancers
The Indian blogging and freelancing ecosystem did a 360-degree turn with the implementation of Goods and Services Tax (GST) since 1st July. All we know is that bloggers now need to pay 18% Goods and Services Tax (GST) over the income exceeding 20 lakhs. Other than this, everything else is still under dubiety, including the GST filing and implementation of new tax rules and regulations. There is a lot of confusion in the market and the intention of this guide is to clear the confusion and give freelancers a clear path to follow.
After 1st July 2017, there are no exemptions applicable to GST registration. It is equally mandatory for both product sellers and service providers. Talking to FactorDaily, Paras Mehra, the founder of Hubco, which is an accounting solution provider for SMEs and SMBs, stated details about the strictness of GST mandate. According to him, every service provider including bloggers, who are generating revenue by exporting services outside India is liable for GST registration. On the other hand, some economists say, GST is not applicable for those who export services outside India.
What are the facts? Let’s explore.
How Bloggers Get paid?
There are certain things related to GST which are not addressed under the GST law. However, before we get into a detailed interpretation of GST situation, it is essential to know why bloggers need to register themselves for GST.
Freelancers and bloggers income usually come under the “export of services” category. The Export of Services is exempted from GST but filing ITR is mandatory at the end of the fiscal year. Freelancers work with foreign clients, who pay via PayPal, and the money is withdrawn into their Savings or Current Account – this is the general working pattern.
Again, most of the bloggers use advertising portals like AdSense from where they earn revenue when ads placed on their blogs receive clicks and impressions. It is not possible to bloggers to know who are the advertisers behind the system as AdSense works as the medium. According to GST laws, advertising revenue comes under the taxable service category.
How do you classify the receiver and supplier of advertising services?
If you are a vendor, you need to impose GST on the individual or company who buys your services and deposit the same to the government. However, before undertaking a GST transaction, you need to understand the difference between a supplier and a receiver.
Any individual who requests an advertisement to be displayed on TV, radio, Internet or print, is known as the receiver of services. A supplier is a person who publishes an advertisement on either of the above media.
Although, while talking about the GST aspects related to bloggers, we should consider the following:
1. Is blogger also a supplier?
A blogger is someone who provides space for brands to place their advertisement. Therefore, a supply of service is created. Hence, the blogger can also be called a supplier.
2. Who is known as a receiver?
For instance, if we talk about Google AdSense, Google facilitates the advertising channel between the companies and the blogger. Like Google, there are various other market players where bloggers sign up. As the bloggers and advertisers are not directly in contact with each other, the dealer cannot be held liable as a receiver.
3. Is the blogger aware of the GSTIN and other vital details about the advertising company?
As the blogger is directly in contact with the facilitating agency, like Google AdSense, there is no way a blogger can find any details about the advertiser or the company whose ads are being placed on their site. Details like who is supposed to pay for the advertisement, are these companies registered with GST and in whose name the invoice should be raised, are not approachable.
4. Who pays the blogger?
Payments are made by the facilitating agency, like Google, to the blogger based on the traffic generated by the blogger’s site and advertisement clicks. There is no invoice raised by the blogger, but they receive the payment via check or direct bank transfer. On the other end, AdSense invoices their direct ad clients and takes payment from the advertisers for the advertisements placed.
To be more aware of the GSTIN and other such details, you can ask Google to send a statement with the number of companies who put ads on your website and the applicable charges. I doubt whether Google and other advertisement facilitators will ever reveal their client details. Why should they? It makes sense. Supposing they do, as a blogger, you may either raise an invoice in the name of Google or on the name of the advertiser.
Things get even complicated when the blogger will have to calculate the taxes to be charged before raising an invoice. If the invoice is for somebody within the boundaries of your state then, as a blogger, you will have to charge central GST (CGST), as well as state GST (SGST). However, in case your client is from some other state, then you will have to charge integrated GST (IGST).
Being a blogger or freelancer, it can be too much of work to identify the advertiser, know their location and check if they are registered for GST or not, but it is mandatory now.
Although nobody is sure about the level of GST implementation for bloggers, we are trying to help you with buyer identification, location differences and every other hidden detail about GST.
As the present situation stands, all the bloggers are liable to register themselves and pay 18% tax even if they are making as low as one rupee.
GST Registration for Bloggers
As per section 24 of Central GST Act, any individual who is receiving income from outside India or the state, is liable to get registered with GST and any exemptions limit is not applicable.
To be precise, the 20-lakh exemption limit is only valid for small businesses who earn their revenue from within their state. However, if you are a blogger or a freelancer who export services and has income source from outside India, GST registration is must for you, without any exemption limit.
As per GST laws, blogging and freelancing services are categorised under online information and database access or retrieval services.
How to register for GST Online?
Here is a step-by-step for GST registration?
1. Create a login account on official GST website. You must fill a valid email id, mobile number, PAN number. The site will automatically verify your PAN number instantly. For email id and mobile number verification, you will be sent a One Time Password (OTP). All these details will be submitted to form PART 1 of GST REG-01.
2. Fill the registration form and upload the required documents. Here is a list of documents you need for GST registration:
- Constitution of taxpayers, like COI and Partnership deed.
- Address proof for the business existence, like NOC, rent agreement and electricity bill.
- Bank account details
Online form submission also requires FORM GST REG-02, to be filled.
Note: Freelancers and bloggers should setup a Sole Proprietorship firm, and conduct all their businesses through a Current Account. The next option is a Partnership LLP firm. But, if you want to remain solo, opt for a sole proprietorship firm.
3. The application is then forwarded to a verification officer, who checks the application and the authenticity of the documents. If everything goes well, your GST registration will be granted within three working days.
If there is any document missing or the form is not filled correctly, you will be sent all the information in three business days in FORM GST REG-03.
However, if you do not hear anything from the verification team within three working days, your registration is granted.
4. You will be issued a certificate of registration in FORM GST REG-06, and you will be notified via the registered email id. You can login to the official portal and download the registration certificate.
Documents required especially for blogger’s registration for GST
Gather all these documents before filing the GST registration:
1. Photo proof – In the case of proprietorship, photo of the proprietor, photo of managing partner in case of LLP or firm and photo of MD or full-time director in case of Company.
2. Registration Proof – Partnership deed for partnership firms, a registration certificate for Company or LLP. If you have a proprietorship, you do not need any registration certificate as the PAN will be sufficient.
3. Address Proof – If you are the property owner, you will have to submit documents like electricity bill, property tax receipt or registration documents of the property. If you operate from a rented place, you will have to provide a copy of rental agreement or lease document, along with the electricity bill in the owner’s name. If you neither rent nor own the property, you will have to submit a copy of NOC.
4. Supporting documents – Bank statement, bank account passbook, a copy of cancelled cheque with name, account number, IFSC, MICR and authorisation form.
Penalty in case of no registration
In case you fail to register for GST, you will be liable to pay two penalties. For no registration, the penalty is upto Rs. 25,000 and per day Rs. 100 for no return filing.
Place of supply for bloggers and freelancers
The place of service recipient is the location of supply. However, the service recipient is considered to be located in India if:
- Proof of location submitted by the service recipient via the Internet is in the territory taxable.
- The taxable territory issues the card used to make the payment settlement. This can include credit card, stored value card, debit card, charge card and smart card as well.
- Billing address of the service recipient is within the taxable territory.
- The IP address of the device used by the service recipient within the taxable territory.
Compliance after GST registration
There are certain compliances all bloggers and freelancers need to follow once the registration is done. The list of compliance to be followed are:
- File sales return or outward return by the of the 10th of the succeeding month.
- File purchase return or inward return by the 15th of the succeeding month.
- File consolidated return by the 20th of the succeeding month.
- Upload all the invoice created to the government site of GST.
- Pay the required taxes by the 20th of the succeeding month.
Export Services Under GST
Export of services under GST simply mean, “the supply of services outside India”. If you are a blogger and you are an Indian national, staying in India, any blogging service that you sell outside India is termed as export of services. If you are offering any kind of freelancing services to clients outside India, it is an export of services.
Note: Any payments that you receive from Google India is not treated as export of services, and you will have to pay GST.
Provisions related to export of services
All the provisions connected to the export of services fall under the IGST act. According to the law of IGST, export of services is only allowed under two methods:
1. Export with GST
You can sell your services outside India, with payment of GST and later claim it as a refund on the total services supplied.
2. Export without GST
You can also sell your blogging services outside India with a Letter of Undertaking (LTU) or bond without paying GST and claim a refund on input taxes paid, if any. You will have to fill the form with the online GST department or offline, depending on your convenience.
For example, if you are a blogger exporting services and you are about to bill one of your clients for $10,000. To fulfil the client order, you took input service worth Rs. 2,00,000 and paid 18% GST for the same. Therefore, if you decide to file the LTU, you can bill your client without any applicable GST and later claim the refund on input tax paid. Your contribution tax amount, in this case, should be Rs. 36,000/-.
However, if you decide to export your services with payment of GST, you need to calculate the total tax and adjust the amount with the input tax credit. Later, you can claim the full refund. In this case, your total output tax liability would be Rs.1,08,000 ($10,000 x Rs. 60 per dollar) and input tax amount will be same (Rs. 36,000). Therefore, your net refund to be claimed would be Rs. 72,000/-.
Procedure to claim GST refund
- From the date of export of services, file GST RFD-01 within two years.
- Once the FORM GST RFD-01 is submitted, the proper officer scrutinises your application within fifteen days and provide the acknowledgment under FORM GST RFD-02.
- The proper office issues the refund order within sixty days from the date of application acceptance.
Composition scheme designed especially for bloggers and freelancers
The government has extended a benefit of composition scheme for the bloggers and freelancers. All small dealers with a yearly turnover of not more than Rs.75 lakh would not be required to comply monthly. They can file their returns quarterly and need to pay only 2% taxes of the total revenue. However, those bloggers in India that earn revenue generally through interstate means, they are not eligible to enjoy the benefit of compliance scheme.
Top 3 GST Software in India
Automate the GST process with a GST compliant software. We recommend three GST software below.
GST Enabled Accounting Software
1. Reach Accountant GST Software
Reach Accountant GST Software is a GST filing software specially designed for Tax Consultants. Also, this software is quite useful for SMBs. Reach Accountant GST Software works as a GST filing software, GST ERP software, GST accounting software and GST POS software. Some of the best features of Reach Accountant GST Software are GST invoicing, HSN/SAC code mapping, Auto reconciliation GSTN, GST Computation, GST challan generation, GST filing, GST payment and Free e-learning.
GST filing software is free, but you will have to pay Rs. 150 per filing. For GST accounting software, you need to pay Rs. 6000, with the annual renewal of 20%.
2. Tally ERP 9
Tally ERP 9 is one of the best software to maintain payroll and inventory. It is a simple yet powerful software that can handle all your tax complexities. Some of the best features of Tally ERP 9 are Investment, HR and payroll, multiple company, inventory management, financial management, product database, Invoice, taxation management, and supplier and purchase order management.
Tally ERP 9 will cost you Rs. 21,780 for single user and Rs. 65,340 for multiple users with the annual renewal of 25%.
3. MARG ERP 9+
MARG ERP 9+ is a very simple software. Being one the top 5 software in India, it is beneficial in resolving your data management needs and all other sorts of business need. Some of the best features of MARG ERP 9+ are easy and fast excise invoice generation, inventory accounting management, variable duty rate selection in the process of invoice generation, comprehensive Bill of item selection in Bill, varied excises duty consideration like AED Cass and BED.
MARG ERP 9+ will cost you Rs. 7200 for single user and Rs. 25,200 for multiple users with 40% annual renewal charge.
Some other good GST enabled accounting software are Zoho Books at the price of Rs. 2500/- per year with 100% annual renovation and Quick books at the cost of Rs. 5000/- per year with 100% annual renewal fee.
GST Filing Software
1. Reach Stand Alone GST Filing Software
Reach Stand Alone GST filing software is one of easiest GST Filing software for Tax Consultants to handle all the client Tax filings. Some of the best features of Reach Stand alone GST filing software are free GST course online in multiple languages, GST reconciliation, GST preparation, GST filing, Data import, Data export and on chat GST filing assistance.
Reach Stand alone GST filing software is available for free but you need to pay Rs. 100 to Rs. 150/- per filing.
2. Clear Tax
Clear Tax is an easy and straightforward GST filing software, which can be a great fit for accountants who require tools to help their clients prepare GST without accounting. Some of the best features of Clear Tax GST filing software are GST course online, assistance to find clients, GST preparation, GST filing, Data import and Data export.
Clear Tax is available at the price of Rs. 10,000/-
GEN-GST is majorly focused on the accounting sector, with tools to help accountants in handling clients GST. Some of the main features of GEN-GST are GST filing, GST preparation, Data import and Data export.
GEN-GST is available for Rs. 5,000/-
Although most of the GST software are focused towards the accounts industry, they are also quite helpful for individual bloggers who are not so sure about GST proceedings and GST filing.
Every blogger and freelancer need to submit 18% GST.
Bloggers and freelancers are required to file three returns per month within the state they have registered themselves. The first filing is for the revenue, which is the GST liability that has to be reported. The second filing is for your expenses for which you can later claim credit for the items you spent on like inventory, rent and other such expenses. The third filing is for the net GST liability which equalizes GST liability less GST credit. In short, the third return is your net tax.
If you are not sure whether your yearly income will reach the bar of 20 lakh per year or not, you can still charge GST from your clients. In case your income does not reach Rs. 20 lakhs at the end of the year, the GST you charged from your customers will be credited back to your clients.
It is mandatory for the bloggers to register for GST and discharge their GST on time by generating GST invoices. Doing so will keep you safe from any risks of not paying the tax.
18% GST is the constant rate for both local and interstate transactions. However, bloggers who will be raising interstate invoices, they will have to raise an integrated GST (IGST) invoice. Those who are into in-state transactions, need to generate both Central GST (CGST) and State GST (SGST) invoices, at a rate of 9% each.