TDS and GST for Freelancers: How to Stay Compliant Without a Finance Team

If you're a freelancer in India, taxes can feel like a mystery. One day, you're just finishing a client project and feeling good about getting paid. The next day, the client sends a message saying,

“Hey, we’ve deducted TDS. You’ll get Form 16A at the end of the quarter.”

And you’re like... wait, what?TDS? Form 16A?Where was this in the onboarding?

And then someone else asks, “Have you registered for GST?” And now there’s a whole new set of doubts. Do I need GST? What if I’m not earning 20 lakhs yet? Am I doing something wrong by not charging GST?

Honestly, most freelancers either avoid all this until it becomes a mess, or they pay random amounts just to stay safe.

But here’s the thing. You don’t need to be a CA or hire a finance team to stay tax-compliant. You just need to understand a few basics, like what TDS is, when GST applies, and how to avoid penalties or overpaying.

Let’s break things down in the simplest way possible.

What is TDS, and Why Do Clients Deduct It?

TDS stands for Tax Deducted at Source. It’s basically a way the government collects tax in advance.

So instead of waiting for you to pay tax at the end of the year, the client who’s paying you deducts a small percentage of your payment and deposits it to the government on your behalf.

Simple example:Let’s say you invoice a client ₹50,000.They might pay you only ₹47,500 and say they’ve deducted 5% as TDS.That ₹2,500 goes straight to the government.

Now here’s the part most freelancers miss: That TDS isn’t gone. You can claim it back while filing your ITR.It’s already counted as “tax paid” under your PAN.

So don’t panic if your client says they deducted TDS.Just make sure:

• You ask them for Form 16A as proof of the deduction

• You file your ITR using the same PAN, so the TDS shows up under your account

• If your total tax liability is less, you’ll get a refund for the extra TDS deducted

But when does TDS apply?

If you’re working as an individual freelancer and not registered as a company, here’s how it usually goes:

Payment Type	TDS Rate	Applies When…
Professional services (Section 194J)	10%	Your income from a client exceeds ₹50,000 in a financial year
Technical services (Section 194J)	2%	Includes things like web development, SEO, etc.
If you haven’t provided your PAN	20%	Always give your PAN to avoid this!

How to Check TDS and Claim Refund Without a CA

You don’t need a finance team or a CA to track your TDS or get your refund. The government actually has made this pretty simple (even if the interface isn’t always friendly).

Here’s a guide to doing it yourself:

1. Register on the Income Tax Portal

• Go to incometax.gov.in

• Click on ‘Register’ if you haven’t already

• Use your PAN, mobile, and email to sign up

Once registered, you can log in and access all your tax-related data in one place.

2. Check Your TDS in Form 26AS or AIS

These two forms show you how much TDS your clients have deposited on your behalf.

• Form 26AS: Older format, shows TDS client-wise

• AIS (Annual Information Statement): Newer, more detailed, includes income, bank interest, foreign remittances, etc.

To download:

• Go to the portal > e-file > Income Tax Returns > View Form 26AS

• Or, search for AIS on the portal dashboard

This will help you match your invoices with the actual TDS deposited.

3. File Your ITR and Claim TDS Credit

When you file your ITR (Income Tax Return), the system will auto-fetch your TDS details using your PAN.

If your total tax payable is less than the TDS deducted, you get a refund.

Example:You earned ₹5,00,000, and the client deducted ₹50,000 as TDS.But based on deductions (80C, etc.), your tax payable is only ₹20,000.The remaining ₹30,000? You’ll get it as a refund in your bank account.

No CA? No problem.

If you’re salaried + freelancing or purely freelance with decent record-keeping, most of this is DIY-friendly now. You can always double-check things via a tax filing platform. And even if you use a CA once, you’ll learn most of the process and feel confident doing it yourself next time.

🧠 Fun Fact: Did You Know?

The TDS (Tax Deducted at Source) system in India was actually introduced in 1922, yes, during British rule!

It started with just salary and interest income, but now it applies to freelancers, rent, professional services, commissions, and more. So, when you feel overwhelmed, just know… even our great-grandparents were probably confused by taxes at some point!

What is GST and Does Every Freelancer Need It?

GST (Goods and Services Tax) is a tax you charge your clients on top of your service fees, but not every freelancer needs to register for it.

Let’s break it down:

Do You Have to Register for GST?

📌 No, unless:

• Your total income (from freelancing and other services combined) exceeds ₹20 lakhs/year (₹10 lakhs for special category states)

• Or you’re offering services to clients outside India (exporting services) and want to claim tax exemption/refund under Zero-Rated Supply

If you're earning below ₹20L and working only with Indian clients, you’re not legally required to register.

When GST Becomes Mandatory for Freelancers:

✅ You must register if:

Scenario	GST Mandatory?
Income > ₹20L in a financial year	✅ Yes
You offer services internationally and want to claim a GST refund	✅ Yes
You work with GST-registered companies, and they insist on a GST invoice	✅ Usually Yes
You’re selling digital products/services on platforms like Gumroad, Udemy, etc.	✅ Yes (if over threshold)

Benefits of Registering for GST (even if optional)

• Professional image: Many big clients prefer vendors with GST

• Input Tax Credit (ITC): You can claim back GST paid on expenses like software, equipment, etc.

• Easier for international work: You can file under LUT and avoid paying 18% GST on exports

What if You Don't Register?

• If you cross ₹20L and still don’t register, it’s considered tax evasion

• You might get penalized or fined

• And if your clients deduct GST on your behalf, you won’t be able to claim credit or refund

So, keep tracking your income. Once you're nearing ₹18–19L in a year, it’s smart to get GST registered in advance.

Myth vs Fact: 

Do You Really Need GST as a Freelancer?

Myth:“I don’t run a business. I’m just a freelancer… so I don’t need to register for GST.”

Fact:If your total income exceeds ₹20 lakhs (₹10 lakhs in special category states) in a financial year, GST registration is mandatory, whether you call yourself a freelancer, consultant, or small business.

And if you’re working with clients outside India? That’s considered an export of services, and GST rules still apply (but you may get zero-rated benefits if done right).

Step-by-Step Guide to GST Registration for Freelancers:

1. Go to the GST portal: 👉 https://www.gst.gov.in/

2. Click on ‘Register Now’ under the ‘Taxpayers’ section

3. Enter your details:

   • Legal name (as per PAN)

   • Email ID and mobile number

   • PAN card number

   • State and district

4. Receive a Temporary Reference Number (TRN) via email/SMS.

5. Log in using TRN and complete Part B of the form.

6. Upload the required documents (see below).

7. Submit using DSC (if applicable) or EVC (OTP on your mobile/email).

8. Once verified, you’ll receive a GSTIN (your 15-digit GST number) on email.

Documents You’ll Need:

Document	Notes
PAN Card	In your name or company name
Aadhaar Card	For identity verification
Bank account details	Passbook/statement or a cancelled cheque
Photo	Passport-size photograph
Business proof	If working from home, the utility bill or rent agreement

Quick Tips:

• If you’re exporting services, don’t forget to also apply for a Letter of Undertaking (LUT) after registration — it helps you avoid paying 18% GST on exports.

• You don’t need to open a new company or firm — you can register as an individual freelancer under your name.

How GST Works for Freelancers – Charging, Filing, and Paying It

Okay, now that you’ve got your GST number, what's next?

This is where most freelancers freak out — but it’s actually not that hard if you break it down.

1. When and How Do You Charge GST?

If you’re GST-registered, you must start adding GST to your invoices.

For Indian clients: You’ll charge 18% GST (in most cases – under SAC code 9983 for IT and professional services).Example: If your fee is ₹20,000, invoice it as:Service Fee: ₹20,000  GST @18%: ₹3,600  Total: ₹23,600

For foreign clients (outside India):You don’t charge GST, but you must treat this as an export of service.You’ll need to file an LUT (Letter of Undertaking) to avoid paying 18% GST on such exports.

2. What Are the GST Returns You Need to File?

Even if you earn nothing, once registered, you need to file returns. These are the main ones:

Return	What’s it for	Frequency
GSTR-1	Report invoices issued (i.e., your earnings)	Monthly or quarterly
GSTR-3B	Summarized tax return to pay your GST	Monthly
LUT filing	Declaration for export without paying GST	Annually (if you have foreign clients)

3. When and How to Pay GST?

If you’ve collected GST from Indian clients, you need to pay it to the government by the 20th of every month (or quarterly, if you're under the QRMP scheme).

How to Stay on Top of Compliance (Even Without a Finance Team)

Not all freelancers can afford to hire a CA or accountant. But that doesn’t mean you have to be clueless or make mistakes.

Here’s how to keep your freelancing taxes clean and sorted, all by yourself:

1. Maintain a Simple Invoice Record

Always create GST-compliant invoices (if you're registered), or at least a clean invoice with:

• Invoice number

• Your name and PAN

• Client’s details

• Service description

• Payment amount

• TDS/GST (if applicable)

Use free tools like:

• Zoho Invoice

• Vyapar

• Or even a solid Excel/Google Sheet format

2. Track TDS Deductions

Check your Form 26AS every quarter. It shows:

• Who deducted TDS

• How much

• When it was deposited

If something’s missing, follow up with the client immediately; they might have forgotten to deposit it or used the wrong PAN.

3. Keep an Eye on Your Total Earnings

Whether it’s ₹5,000 or ₹5 lakhs, your total annual income decides your tax liability.

• Below ₹2.5L? No tax.

• ₹2.5L to ₹5L? Eligible for rebate.

• More than ₹5L? Tax slab kicks in.

4. File ITR on Time (Even If No Tax is Payable)

Filing your Income Tax Return (ITR) is a must, even if:

• You didn’t cross the taxable limit

• You’re only freelancing part-time

• Your client has already deducted TDS

Why? Because only then can you claim a refund or stay on the government’s good side.

5. For GST: File GSTR-1 & GSTR-3B Monthly

If you're under GST, you must file two monthly returns:

• GSTR-1: Details of outward services

• GSTR-3B: Summary of sales and taxes

6. Don’t Mix Up Foreign and Indian Clients

If you serve foreign clients:

• You may need to issue Export Invoices

• GST may not apply if the payment comes in forex

• But you still need to report it.

💡 Pro Tip: Create a monthly reminder checklist:

• Invoices created

• Payments received

• TDS tracked

• GST filedITR planned

It’s honestly less than 1 hour/month if you’re consistent.

 Quick Stat Check:

Freelancing is Booming in India

According to Statista, India had over 15 million freelancers in 2021, and the number is steadily growing.

With more people choosing freelancing over full-time jobs, understanding TDS and GST compliance is no longer optional; it’s essential to stay out of trouble and grow your business confidently.

Common Tax Mistakes Freelancers Make (That You Should Avoid)

Let’s be real — taxes can get confusing. But most freelancers mess up not because they don’t know enough… but because they assume it doesn’t apply to them.

Here are some common tax blunders freelancers make (and how to avoid them):

1. Not Reporting Income from All Clients

Some freelancers only show income from big clients or those who deduct TDS, and skip the rest.

Big mistake.All income, whether from Indian clients, foreign clients, or even part-time projects, must be reported.

Even if it’s ₹1,000, put it in. It keeps things clean.

2. Ignoring TDS Altogether

If a client deducts TDS but doesn’t deposit it properly and you don’t check Form 26AS, you’ll never know.

Result? You may miss out on refunds or get a notice later.

Solution: Always check Form 26AS quarterly, and raise a flag if something looks off.

3. Missing ITR Filing Deadlines

Some freelancers think, “I didn’t earn that much this year, so why file?”

But here’s the thing:

• If you’ve crossed the basic exemption limit (₹2.5L), you must file.

• Even if TDS was already deducted, filing helps you claim refunds.

• Late filing = ₹1,000 to ₹5,000 fine.

  
  

4. Not Registering for GST (When You’re Supposed To)

If your total turnover crosses ₹20 lakh/year (₹10L in some states), GST registration is mandatory.

Skipping this can lead to notices, penalties, and even blocking of payments from GST-compliant clients.

Even if you're under the threshold, some clients may ask for your GSTIN — so be ready.

5. Mixing Personal & Business Expenses

Using one bank account for everything? That’s how you lose track.

Business expenses like:

• Software subscriptions

• Laptops

• Internet bills

• Rent (if it’s your home office)

…can be claimed for tax deductions. But only if you track them properly.

6. No Backup for Payments or Invoices

Freelancers often skip documentation, thinking the client payment screenshot is enough.

But when it’s time to file taxes or answer an IT notice, you’ll wish you had:

• Proper invoices

• Bank transaction proof

• Contracts or emails

Cloud backup (like Google Drive) is your best friend.

7. Forgetting Advance Tax

If your tax due is over ₹10,000 in a year, you're supposed to pay it in 4 parts across the year (Advance Tax).Most freelancers miss this.

Not paying it?You’ll be charged interest when you file the ITR.

Need Help Filing or Tracking Your Taxes?

If you’d rather not deal with all this yourself, from ITR filing to TDS refunds, GST registration, and notices, you can also work with professionals.

👉 Karr Tax is a trusted Indian platform that offers:

• ITR filings (including ITR-4 for freelancers)

• GST filings and registration

• Advance tax calculations

• Help with TDS forms (like 26Q, 24Q, etc.)

• Quick expert consultation if you're ever stuck

You can even file returns directly from your phone using their app.

✅ Used by freelancers, small business owners, and employees from brands like Infosys, HCL, and TCS.

Conclusion

Managing taxes as a freelancer in India isn’t always easy, but it doesn’t have to keep you up at night either.

Once you get the hang of TDS, GST, and your income flow, it’s just about staying organized and filing things on time. You don’t need a finance degree. You just need clarity, a few basic tools, and the habit of checking in every month.

And remember, mistakes happen. But avoiding them becomes easier when you actually understand the “why” behind these rules.

Here’s what you can do next:

• Bookmark this blog or save it in Notion for tax season

• Set reminders for GST returns, ITR deadlines, and advance tax dates

• Use simple tools to track invoices and payments

• And if it ever feels too much, just talk to a CA. No shame in that.

Take control of your finances. You’re not just a freelancer, you’re running a business. And this is part of that journey.