Guide for Freelancers to Manage Cash Flow under GST Regime
A quick guide for freelancers and online sellers to simplify the GST filing process and file returns on their own
The introduction of Goods and Services Tax regime has propelled a new set of taxpayers viz. Online Sellers and Freelancers. While there is a turnover limit of INR 20 lakhs on GST Registration, E-commerce marketplaces have made it mandatory for online sellers to have a GST registration number for their onboarding, irrespective of their turnover. This has resulted in massive demand for GST registration from these seller community. Similarly in many cases, online payment gateways now demand GSTIN for processing international payments. While Export of services is zero rated, still returns needs to be filed on a monthly basis.
The biggest challenge for these taxpayers is that their turnover is extremely small being new to online selling or freelancing, however they are being asked for a tax consultancy fee, which falls between INR 15K to 25K for one financial year, for filing all tax returns. Because of such professional fees, many taxpayers have avoided filing GST returns and eventually paying penalties and late fees.
A normal taxpayer registered under Goods and Services Tax is required to file monthly return in the form GSTR-3B, she is also required to settle the liability with the government at the time of filing this return. Another return which falls due on a quarterly basis is GSTR-1, which includes the invoice level details of all sale of goods/supply of services. Relief has been provided to small taxpayer to furnish this return on a quarterly basis until their turnover exceeds INR 1.5 crores, all other taxpayers are required to file this return on monthly basis. And finally there is GSTR-9 which is the annual return reconciling with all the data filed in one financial year. A typical tax consultant would charge anywhere between INR 15,000-25,000 for filing these 17 returns in a financial year.
Goods and Services Tax Network (GSTN) the organisation behind the tax filing infrastructure for GST was given a clear instruction to make the tax filing process simple for a common man, and to some extent they have delivered on it. The only problem that remains is the data management at taxpayer's end. Often freelancers and online sellers would not maintain a proper records for the expenses incurred and at times may not have consistency in their invoicing as well. If done properly, it becomes very easy for a freelancer or an online seller to file their GST return on their own.
While there are many tools which can help freelancers and online sellers to manage cash flow including spreadsheets, however not everyone is catering to the requirements of Indian users addressing their tax compliance requirements. With extensive research and interacting through hundreds of answers on Quora, we have built Fingage, which has been specifically built for freelancers and online sellers, enabling cash flow management, integrating with payment gateways and finally enabling "Do it yourself" tax filing at 1/10th of the cost presently.
More queries on tax compliance for freelancers and online sellers can be sent at [email protected]