GST Registration for Freelancers: The Foreign Client Rule Nobody Tells You About
Why GST registration is mandatory for ANY freelancer providing services to foreign clients, regardless of the ₹20 lakh threshold, and how to stay compliant
Written by
CA Ashama Rajawat
The Hidden Rule
If you earn even ₹1 from foreign clients, GST registration is MANDATORY—even if your total income is below ₹20 lakh. This catches most freelancers by surprise!
Why This Rule Exists
Services provided to foreign clients are classified as "Export of Services" under GST. While exports are zero-rated (0% GST), you still need GST registration to:
- • Issue proper export invoices
- • File monthly/quarterly GST returns declaring exports
- • Claim input tax credit on business expenses
- • Maintain compliance with FEMA regulations
Domestic vs Foreign Client: The Rules
| Client Type | GST Registration | Threshold |
|---|---|---|
| Indian Clients Only | Optional below ₹20L | ₹20 lakh turnover |
| Foreign Clients (any amount) | MANDATORY | No threshold—₹1 or ₹1 crore |
| Mixed (Indian + Foreign) | MANDATORY | Even if foreign = ₹10,000/year |
Zero-Rated Export: What It Means
Key Concept
Export of services = 0% GST (not 18%)
You don't charge GST to foreign clients:
- • Invoice: $1,000 (no GST added)
- • Client pays: $1,000 exactly
- • You receive: $1,000 (no GST liability)
But you still:
- • Must have GST registration
- • Must file GST returns (showing ₹0 output tax)
- • Can claim input credit on expenses
GST Registration Process (Quick Guide)
Step 1: Documents Required
- • PAN Card
- • Aadhaar Card
- • Address proof (rent agreement/electricity bill)
- • Bank account statement/cancelled cheque
- • Photo
Step 2: Apply Online
Visit gst.gov.in → Services → Registration → New Registration → Fill Form GST REG-01
Step 3: Timeline
7-10 working days for approval. You'll receive GSTIN (15-digit number)
Step 4: File LUT
Immediately file Letter of Undertaking (LUT) to export at 0% GST without paying and claiming refund
Filing Requirements
Monthly/Quarterly Returns
If Turnover < ₹5 Crore (Most Freelancers):
- • GSTR-1: Quarterly (declare exports)
- • GSTR-3B: Quarterly (summary return)
- • Due dates: April, July, October, January
Annual Return:
- • GSTR-9: Once a year by December 31
Input Tax Credit Benefits
Even though you charge 0% GST on exports, you can claim refund of GST paid on:
Eligible Expenses
- • Software subscriptions (18% GST)
- • Laptop/equipment purchases
- • Internet bills (18% GST)
- • Coworking space rent
- • Professional services (CA fees, etc.)
Refund Example
Annual software costs: ₹1,00,000
GST paid: ₹18,000
You can claim ₹18,000 refund!
Common Mistakes
- ✗Working with foreign clients for years without GST registration (penalty risk)
- ✗Charging 18% GST to foreign clients (should be 0% with LUT)
- ✗Not filing GST returns thinking "0% tax = no filing needed"
- ✗Missing out on input tax credit refunds
Conclusion
GST registration is non-negotiable for freelancers with foreign clients, regardless of income level. While it adds compliance burden (quarterly returns), the benefits—legal protection, input credit refunds, and professional credibility—far outweigh the hassle. Register early, file LUT immediately, and stay compliant from day one.