Quick answer: In 2026, a freelancer must register for GST once total receipts from all clients cross ₹20 lakh in a financial year (₹10 lakh in special-category states like Uttarakhand, Himachal Pradesh, J&K and the North-East). Most freelance services are billed at 18% GST. Services for foreign clients are zero-rated — you charge 0% after filing a free Letter of Undertaking (LUT) on the GST portal. The ₹40-lakh threshold announced for Budget 2026 applies to goods only; for services the limit stays ₹20 lakh.
What is the GST threshold limit for freelancers in 2026?
₹20 lakh of aggregate turnover in a financial year. Aggregate turnover is the total of everything you bill — Indian clients, out-of-state clients, and foreign clients — before expenses. It is not your profit.
Two details trip people up:
- Exports count inside the ₹20 lakh. Even if every client is abroad and your supply is zero-rated, the income still pushes you over the threshold. At ₹20 lakh-plus, registration is required, and then you file the LUT.
- Special-category states use ₹10 lakh. If you live in Uttarakhand, Himachal Pradesh, Jammu & Kashmir, or any North-Eastern state, the line is ₹10 lakh, not ₹20 lakh.
Below the limit, registration is optional. Many freelancers register early anyway — more on why in the “Should I register voluntarily?” section below.
What changed and what stayed the same
| Item | Up to 31 March 2026 | From 1 April 2026 (FY 2026-27) |
|---|---|---|
| Services threshold (general states) | ₹20 lakh | ₹20 lakh — unchanged |
| Services threshold (special states) | ₹10 lakh | ₹10 lakh — unchanged |
| Goods threshold (general states) | ₹20 lakh | ₹40 lakh (doubled) |
| Standard GST rate on services | 18% | 18% — unchanged |
| Composition scheme for services | ₹50 lakh limit, 6% flat | No change |
| LUT for exports | Annual, free | Annual, free — same |
The Budget 2026 change that doubled a threshold was for goods. Freelancers sell services, so nothing about their ₹20-lakh line moved. If you read “₹40 lakh GST threshold” anywhere, check whether the article is talking about goods or services — for freelancers the answer is still ₹20 lakh.
The 18% rate: how billing works
Almost all freelance work — design, development, writing, consulting, marketing, video, tutoring — falls under 18% GST.
- Same-state client: 9% CGST + 9% SGST (total 18%).
- Other-state client: 18% IGST.
- Foreign client: 0% — zero-rated, under the LUT. See the next section.
You need the right SAC code (Service Accounting Code) on each invoice. Common ones for freelancers:
| Work | SAC code |
|---|---|
| Management consulting | 998311 |
| IT consulting / software services | 998313 |
| Advertising / promotion services | 998361 |
| Photography | 998392 |
| Other professional services | 9983 group |
Pick the code that best matches what you actually do. A web developer billing under 998313 and a copywriter under 998399-adjacent “other professional services” are both fine — the 18% rate is the same.
Foreign clients: zero-rated billing and the LUT
Services billed to a client outside India, where payment arrives in convertible foreign exchange, are an export of services. Zero-rated is not the same as exempt: the rate is 0%, but the supply still sits inside the GST system, which is why it counts toward your ₹20-lakh threshold.
To invoice a foreign client without charging GST, you file a Letter of Undertaking (LUT) — Form RFD-11 — on gst.gov.in. It costs nothing and takes a few working days to get approved.
With the LUT in place:
- Your export invoice carries no IGST.
- Add a clear line on the invoice: “SUPPLY MEANT FOR EXPORT UNDER LUT, WITHOUT PAYMENT OF IGST”.
- Invoice in the contract currency and convert the value at the RBI reference rate for the invoice date.
- Keep a FIRC (Foreign Inward Remittance Certificate) or e-FIRA from your bank for every foreign payment, plus a purpose code — officers check zero-rated claims against bank records.
The LUT is valid for one financial year only. It does not roll over — file a fresh one each March before the new year begins, or your April export invoices can’t legally go out at 0%.
Without a LUT you would have to charge 18% IGST on the foreign invoice, pay it with your return, and then apply for a refund through Form RFD-01 — slow, and it locks up your cash for weeks. The LUT is the better route for almost every freelancer.
How to register (Form GST REG-01)
Registration is free on gst.gov.in. You apply in Form GST REG-01 with:
- PAN and Aadhaar
- Proof of business address (home address works for most freelancers)
- Bank account details
- A passport-size photograph
Approval usually comes through in 3–7 working days after verification. File the LUT immediately after you get your GSTIN, so the first foreign invoice goes out at 0%.
Returns you must file
Once registered, you file two returns every period:
- GSTR-1 (outward supplies) — by the 11th of the following month.
- GSTR-3B (summary + payment) — by the 20th of the following month.
If your turnover is up to ₹5 crore, you can choose the quarterly QRMP scheme and file both returns quarterly, with an optional Invoice Furnishing Facility (IFF) in the first two months of the quarter. E-invoicing applies only above ₹5 crore of turnover, so most freelancers never touch it.
Penalties for ignoring all this: ₹50 per day for late return filing (capped at ₹5,000 per return), and failure to register when you should have means a penalty of 10% of the tax due or ₹10,000, whichever is higher.
The RCM trap: foreign software subscriptions
Most freelancers think GST only matters after ₹20 lakh. There is one exception worth knowing: if you pay for foreign software or platforms that do not charge Indian GST — Canva, Zoom, AWS, Upwork fees — the GST law treats you as the recipient under the reverse charge mechanism (RCM). Technically this triggers mandatory registration regardless of your income.
This is one of the least-understood rules among freelancers. If you spend meaningfully on foreign tools, check with a CA whether your setup falls under it — plenty of small freelancers are non-compliant without realising it.
Composition scheme: 6% flat, but read the fine print
Service providers with turnover up to ₹50 lakh can choose the composition scheme: pay a flat 6% GST (3% CGST + 3% SGST) instead of 18%.
The trade-offs are real: you cannot claim input tax credit, you cannot make inter-state supplies, and you cannot issue taxable invoices. It suits a small freelancer selling only inside one state who wants the simplest possible compliance. The moment you have foreign or out-of-state clients, the regular scheme is the better fit.
Should I register voluntarily below ₹20 lakh?
Many do, for practical reasons:
- Input tax credit: claim back the GST you pay on laptops, software, internet, and rent. Unregistered, that GST is just a cost.
- LUT and refunds: only registered businesses can file a LUT and get clean zero-rated export treatment.
- Corporate clients: GST-registered companies prefer (sometimes require) a GSTIN on invoices so they can claim input credit on your bill.
The catch: once registered, all return filings apply, even if your income stays under the threshold. Voluntary registration is a door that only opens one way — be sure before you walk through.
GST meets income tax: the parts freelancers mix up
Two quick connections worth keeping straight:
- TDS on your invoices (Section 194J): Indian clients deduct 10% TDS when their yearly payments to you cross ₹30,000. TDS is an income-tax deduction, not GST — you claim it back or adjust it when you file your ITR. In the new Income-tax Act, 2025, the TDS provisions moved into Section 393.
- Free products from brands: if you get products worth over ₹20,000 in a financial year in exchange for posts, the brand must deduct 10% TDS — Section 194R under the old Act, Section 393 (Table, serial 8(iv)) under the new one. For GST, the product is payment in kind for your promotion service.
Your GST registration and your presumptive-tax choice under Section 58 of the new Act (old Section 44ADA) are separate decisions — one does not force the other.
Frequently asked questions
Do freelancers need GST registration if turnover is below ₹20 lakh?
No — below ₹20 lakh (₹10 lakh in special-category states), registration is not mandatory, even for inter-state or export work. But you may register voluntarily to claim input tax credit or to file a LUT for foreign clients. Once registered voluntarily, you must file all returns like everyone else.
What is the GST threshold limit for freelancers in 2026?
₹20 lakh of aggregate annual turnover for most states; ₹10 lakh in special-category states (Uttarakhand, Himachal Pradesh, Jammu & Kashmir, the North-Eastern states). “Aggregate turnover” is total billing before expenses, and it includes foreign-client income.
What GST rate do freelancers charge on invoices?
18% on most freelance and consulting services — 9% CGST + 9% SGST for same-state clients, 18% IGST for clients in other states, and 0% (zero-rated) for foreign clients after filing a LUT.
How does a freelancer file LUT for foreign clients?
File Form RFD-11 on gst.gov.in after you get your GSTIN. There is no government fee. Approval typically takes a few working days. With the LUT active, raise foreign invoices without IGST, mark them as export under LUT, and keep FIRC or bank-advice proof for every foreign payment received.
Does LUT need to be renewed every year?
Yes. A LUT is valid for one financial year only and does not carry over automatically. File a fresh LUT each year — most exporters do it in March, before April invoices go out.
What is the SAC code for freelance services?
Most professional freelance work falls under the 9983 group. Use the closest match: 998311 for management consulting, 998313 for IT consulting, 998361 for advertising services, 998392 for photography. The rate stays 18% in all of these.
Official sources
- GST Portal — gst.gov.in (registration, LUT filing, returns)
- CBIC — cbic.gov.in (GST notifications and circulars)
- Income Tax Portal — incometax.gov.in (TDS under Section 194J and 194R)
Reviewed by Asuthod Rathod, CA. Last updated: 12 October 2026.
Disclaimer: Tax rules change often and individual situations differ. This guide is for general information only — check the official portals linked above or speak to a qualified tax professional before acting on it.
Editorial byline for eircicai GST guides — covering registration, return filing, rates, and compliance for small businesses. Content is reviewed by Asuthod Rathod, CA.