The threshold, first
GST registration becomes compulsory once your aggregate turnover exceeds ₹20,00,000 for services — ₹10,00,000 in the special category states. The ₹40,00,000 figure quoted almost as often applies to goods, not services, and confusing the two is the single most common error in this area.
For most freelancers, consultants and independent professionals, ₹20,00,000 is the number that matters.
Where the export confusion comes from
Supplying a client outside India is, under Section 2(6) of the IGST Act, an inter-state supply. And Section 24 of the CGST Act makes registration compulsory for persons making inter-state taxable supplies, regardless of turnover.
Read those two provisions together and the alarming conclusion follows: bill a US client ₹50,000 and you must register. That is the reasoning behind the advice you will find on most forums, and a government FAQ published shortly after GST launched said exactly this.
What that reasoning misses is Notification 10/2017-Integrated Tax, which came afterwards and exempts persons making inter-state supplies of services from compulsory registration, provided aggregate turnover stays below the ordinary threshold.
The practical position: a freelancer billing ₹12,00,000 a year entirely to overseas clients is, on the plain reading of Notification 10/2017, not required to register for GST. The exemption covers services only. An inter-state supplier of goods genuinely must register from the first rupee.
The older FAQ has not stopped circulating, which is why you will still be told the opposite with great confidence. This is a genuinely contested corner of the law rather than a settled one, so the sensible course is to confirm your own position with a chartered accountant rather than acting on either a forum post or this page — but you should at least know that the "register from rupee one" advice is not the only reading, and is arguably the wrong one.
What changes once you do cross ₹20 lakh
Export of services is zero-rated under Section 16 of the IGST Act. Zero-rated is not the same as exempt: you charge 0% GST on the invoice, and you can still claim input tax credit on your business expenses.
There are two ways to handle it once registered:
- File a Letter of Undertaking (Form RFD-11) and export without paying IGST at all. This is what almost every service exporter does, because it avoids tying up cash.
- Pay IGST on the export and claim a refund afterwards. Legally available, operationally worse — your money sits with the department until the refund is processed.
An LUT is filed annually and only exists once you are registered. If you are under the threshold and unregistered, there is no LUT to worry about.
Income tax is a separate question entirely
GST and income tax are frequently muddled together. Being outside GST says nothing about your income tax position — that is governed by Section 44ADA, advance tax, and the ordinary slabs.
Section 44ADA, and who actually qualifies
Presumptive taxation under 44ADA lets certain professionals declare 50% of gross receipts as taxable income without maintaining detailed books, provided actual profit is not higher. The limit is ₹50,00,000 of gross receipts, rising to ₹75,00,000 where cash receipts are 5% or less of turnover — which, for anyone paid by bank transfer or UPI, is effectively always.
The eligibility trap. 44ADA applies only to specified professions: broadly medicine, law, engineering, architecture, accountancy, technical consultancy, interior design, company secretaryship and film artists. Freelance writers, YouTubers, social media creators and a range of other digital occupations are generally not specified professions and typically cannot use 44ADA. A great many people file on a presumptive basis without checking this.
Here is what the tax looks like for those who do qualify, under the new regime for FY 2026-27. Note that the ₹75,000 standard deduction applies to salary, not to professional income, so it does not appear.
| Gross receipts | Presumed income (50%) | Income tax incl. cess |
|---|---|---|
| ₹15,00,000 | ₹7,50,000 | Nil |
| ₹20,00,000 | ₹10,00,000 | Nil |
| ₹30,00,000 | ₹15,00,000 | ₹1,09,200 |
| ₹50,00,000 | ₹25,00,000 | ₹3,43,200 |
The first two rows surprise people. At ₹20,00,000 of receipts, presumed income is ₹10,00,000 — below the ₹12,00,000 rebate ceiling — so the income tax is nil. A qualifying professional can bill ₹20 lakh and owe no income tax at all.
The TDS gap nobody plans for
Indian clients typically deduct TDS at 10% under Section 194J for professional services. That rate is applied to your gross receipts, while your actual liability is computed on half of them.
At ₹30,00,000 of receipts from Indian clients, that means ₹3,00,000 withheld against an actual liability of ₹1,09,200. You are owed a refund of ₹1,90,800 — money you cannot touch until you file and the refund is processed.
This is the opposite of the problem freelancers expect. If your clients are Indian and deducting TDS, you may be substantially over-withheld. If your clients are overseas, nobody is withholding anything and the full liability is yours to fund — which is where advance tax comes in.
Advance tax
If your total tax liability after TDS exceeds ₹10,000 in a financial year, you must pay it during the year rather than at the end. Most taxpayers pay in four instalments — by 15 June, 15 September, 15 December and 15 March. Those filing under 44ADA have a simpler position: the whole amount may be paid in a single instalment by 15 March. Missing instalments attracts interest under Sections 234B and 234C.
The practical habit that makes this painless: move a fixed share of every payment into a separate account the day it arrives. Around 30% of receipts is a reasonable default until your own calculation refines it. Advance tax then comes from a pot that already exists rather than from whatever happens to be left in March.
A short checklist
- Track aggregate turnover against ₹20,00,000, not ₹40,00,000.
- If you export services and are below the threshold, understand that registration is arguably not compulsory — and get that confirmed for your own facts.
- Check whether your occupation is genuinely a specified profession before filing under 44ADA.
- Reconcile client TDS against Form 26AS each quarter, so a client's failure to deposit surfaces in months rather than at filing.
- Reserve tax on receipt, and diarise 15 March.