Yes, GST is applicable on consultancy fees in India, generally taxed at a standard rate of 18%. It is considered a supply of service under the GST framework. Registration is mandatory for consultants if their annual aggregate turnover exceeds ₹20 lakh (₹10 lakh for special category states).
Types of Professional Services Subject to GST
This includes services provided by legal professionals, financial consultants (excluding input-taxed financial supplies), architects and engineers, marketing and business consultants, and IT specialists.
Professional services are usually taxed at 18% under GST. For intra-state supplies, this is separated into 9% CGST and 9% SGST. An 18% IGST is applicable for interstate supply. A GST-registered professional can claim input tax credit (ITC) on business expenses and must charge GST on client invoices.
Do I Need To Charge GST? If your annual income (before expenses) is less than $30,000 you are considered a small supplier, and will not need to charge. As soon as your income exceeds this, you will need to charge.
What is the GST rate on consultancy services in India? The GST on consultancy services in India is 18% for most professional services.
If you make $75,000 or more in business income, you're required to register for and charge GST (we'll cover this in a sec). This means that you charge an additional 10% on top of your regular fees, which you record and pay to the government when you lodge your next Business Activity Statement (BAS).
Under GST, the reverse charge mechanism (RCM) applies to specific consultancy services. Notably, legal consultancy services provided by individual advocates or firms to business entities are subject to RCM, where the recipient is liable to pay GST.
You can determine how much to charge as a consultant by calculating your desired annual income and the number of hours you plan to work in a year. Then, you can calculate your hourly rate by dividing your desired annual income by the number of billable hours in a year.
If you charge GST/HST on your services, you then charge the tax on the total, including the (pre-GST/HST) disbursement.
Indian freelancers must pay GST when their turnover exceeds INR 20 lakhs/INR 10 lakhs in special category states) in a financial year. If a freelancer who doesn't exceed the specified turnover voluntarily registers under GST, they are also obligated to pay and collect GST and file returns on time.
GST Applicability on Service Industry
Consultant taxes work the same way as any other self-employed person's taxes. Because they are self-employed and not part of a larger organization, they are required to pay taxes on consulting income and lodge them as income tax.
The application of GST on Services Provided to Foreign Companies depends on multiple factors, especially the place of supply, as defined under the IGST Act. Even if the client is located abroad, GST may still be applicable if the place of supply is determined to be within India.
Do I need to charge GST to American (non-Canadian) customers? To answer this, we follow the place-of-supply rules, which means that if the customer is located outside of Canada, no GST needs to be charged.
Yes, if you are a GST/HST registrant, you must charge GST/HST on both fees and expenses, including travel allowances. The fact that you receive an advance for the expenses does not exonerate you from the obligation of invoicing for the expenses and charging GST/HST. Please read the terms of payment carefully.
GST applies to sales connected with Australia including goods, services, real property or other things. Examples include: digital products, such as software or eBooks, to Australian consumers. imported services, such as professional consulting services, to Australian consumers.
Note: RCM is not applicable to, - ➢ A Department or Establishment of the CG, SG or UT; or ➢ Local authority; or Governmental agencies, Who have taken registration under CGST only for deducting tax u/s 51 and not for making a taxable supply. ➢ A registered person paying tax under section 10 of the said Act.
Example: Healthcare services, educational services, and public utility services (e.g., water supply) are exempt from GST. This exemption is unconditional, meaning the supply is fully exempt from GST without any terms or conditions attached.
The CRA deems any business with $30,000 or less in revenue to be a small supplier. If you meet the threshold required to be considered a small supplier, you don't need to register for or charge the GST/HST, regardless of whether you sell exempt or zero-rated goods and services or not.
VAT is more commonly used in Europe and is typically collected at each step of the supply chain. GST is often applied in a single stage, usually the point of sale, and is common in countries like Australia, New Zealand, and Canada.
As per Section 22 of the CGST Act, 2017, any person supplying taxable services with an aggregate turnover exceeding ₹20 lakhs (₹10 lakhs in special category states) in a financial year must register under GST.
But persons who are engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax or an agriculturist, to the extent of supply of produce out of cultivation of land are not liable to register under GST.
GST Rates Applicable on Professional Services
Standard GST rate for most professional services: 18% (9% CGST + 9% SGST for intra-state, or 18% IGST for inter-state supply). In RCM cases, the GST rate still applies (usually 18%), but the recipient pays it.