GST and TDS for Indian freelancers: what to put on the invoice and what reaches your bank

Your first serious client project raises two tax questions at once. Should there be GST on the invoice? Why is the payment smaller than the invoice? This guide answers both, with a worked example, and flags the points where you should talk to a chartered accountant.

GST: do you need to charge it?

You must register for GST once your aggregate turnover for services crosses ₹20 lakh in a financial year (₹10 lakh in some special-category states). Payments from foreign clients count towards that total. Below the threshold, registration is optional.

• Not registered: don't add GST and don't show a GSTIN. Your invoice is simply your fee.
• Registered, Indian client: add GST — 18% for most IT, design and consulting services — and show your GSTIN. A business client can usually claim it back as input tax credit.
• Registered, foreign client: the work can qualify as an export of services. Broadly, the client must be outside India, the place of supply must be outside India, and you must be paid in convertible foreign exchange. Exports are zero-rated; file a Letter of Undertaking (LUT) on the GST portal to invoice them without IGST.

Some freelancers register early on purpose, because larger Indian companies prefer GST invoices and because registration lets you claim credit on the GST in your own business purchases. It also adds monthly or quarterly filing work, so weigh both sides.

TDS: why your payment is smaller than your invoice

When an Indian business pays you fees for professional or technical services, it usually has to deduct tax at source (TDS) and deposit it with the government in your name. From 1 April 2026, this is covered by section 393(1) of the Income-tax Act, 2025, which replaced section 194J of the 1961 Act. The rates carried over:

• 10% for professional services, such as design, consulting, legal or accounting work.
• 2% for fees for technical services. Whether software development counts as professional or technical depends on the contract and facts, so check with your client's finance team and your CA.
• Deduction usually starts once the payer's total fees to you cross ₹50,000 in a year.
• Higher rates apply if you haven't given the client your PAN.

Individuals and HUFs who aren't liable for a tax audit generally don't have to deduct TDS, so a payment from a private person usually arrives in full.

When GST is shown separately on the invoice, TDS is generally calculated on the amount before GST.

TDS isn't a cost — but it is a cash-flow gap

The deducted amount is credited to your PAN and shows in your annual tax statement. When you file your return, it counts against the income tax you owe, and any excess is refunded. Still, it reduces the cash you receive now, which matters if you're budgeting month to month.

Check your annual tax statement every quarter. If a client deducted TDS but didn't deposit it or file their return, the credit won't appear, and it's far easier to fix early.

A worked example

A GST-registered designer invoices an Indian company ₹60,000 for a brand identity project:

1. Fee: ₹60,000
2. GST at 18%: ₹10,800
3. Invoice total: ₹70,800
4. TDS at 10% on the fee (excluding GST): ₹6,000
5. Payment received: ₹64,800

The ₹10,800 GST is paid to the government in the GST return. The ₹6,000 TDS is credited towards the designer's income tax. If the same designer weren't GST-registered, the invoice would be ₹60,000 and the payment ₹54,000.

What a good invoice includes

• Your name, address and PAN; your GSTIN if registered.
• The client's name, address and GSTIN (if any).
• A unique invoice number and the date.
• A clear description of the service, the period or milestone, and the SAC code if registered.
• The fee, the GST (split into CGST and SGST, or IGST), and the total.
• For an export under LUT: a note that the supply is meant for export under a letter of undertaking without payment of IGST.
• Payment terms and bank details.

Get these checked by a CA

This guide is general information. A chartered accountant should confirm:

• whether your work is professional or technical for TDS purposes
• whether presumptive taxation suits you
• how to treat platform payouts
• whether specific foreign work qualifies as an export