Guide · GST & Taxes

GST for Indian Freelancers: CGST, SGST, IGST, SAC Codes & TDS Explained (2026)

By Mitti Team · Updated May 2026 · 12 min read

If you're an Indian freelancer, you've probably faced questions about GST — whether you need it, which type applies to your invoice, what SAC code to use, and how TDS works. This guide answers all of it, plainly, with no jargon.

Contents

Do you even need GST registration?
CGST vs SGST vs IGST: What's the difference?
SAC codes for freelancers — what to use
TDS Section 194J: When clients deduct tax
What a proper GST invoice looks like
If your client is overseas (zero-rated exports)
Composition scheme — is it for you?
Quick checklist

1. Do you even need GST registration?

GST registration is mandatory only if your annual turnover exceeds a threshold. As of 2026:

Service type	Threshold	Notes
Services (most freelancers)	₹20 lakh/year	Standard threshold for most Indian states
Services in special category states	₹10 lakh/year	Manipur, Mizoram, Nagaland, Tripura, Uttarakhand, Meghalaya, Sikkim, Arunachal Pradesh, Puducherry, J&K
Inter-state services	₹0 (no threshold)	If you provide services to clients in another state, you must register regardless of turnover
E-commerce aggregators	₹0 (no threshold)	If your work comes through platforms like Upwork, Fiverr

Practical tip

If you earn less than ₹20 lakh and all your clients are in your state, you don't need GST registration. But most freelancers working with businesses benefit from registering voluntarily — it makes you look professional and lets your clients claim input tax credit.

Once registered, you must file GST returns monthly (GSTR-1 for outward supplies, GSTR-3B summary). A CA can handle this for ~₹500–1,500/month.

2. CGST vs SGST vs IGST: What's the difference?

This is where most freelancers get confused. The type of GST on your invoice depends entirely on one thing: are you and your client in the same state or different states?

Situation	GST type	How it splits	Example (18% GST)
Your client is in the same state	CGST + SGST	50% Central, 50% State	CGST 9% + SGST 9%
Your client is in a different state	IGST	100% Integrated (IGST goes to Centre, state gets share later)	IGST 18%
Your client is overseas	Zero-rated (LUT)	Export — GST is nil with Letter of Undertaking	0% (export)

Key point

It's not about where you work from, or where the work is delivered — it's about where you are registered vs. where your client's billing address is. A Mumbai designer billing a Delhi startup uses IGST.

Why does this matter?

If you show CGST+SGST on an inter-state invoice or IGST on an intra-state invoice, it's incorrect. Your client's input tax credit (ITC) claim could get rejected. Get it right — it protects both of you.

Mitti automatically detects which type applies when you select your state and client's state. No manual calculation needed.

3. SAC Codes for Freelancers — What to Use

SAC (Service Accounting Code) identifies your service category under GST. It must appear on your invoice and GSTIN filings. Here are the most common ones for Indian freelancers:

Service	SAC Code	Description	GST rate
Graphic Design / Brand Identity	998361	Graphic, design, branding services	18%
Web Design & Development	998314	IT design and development services	18%
UI/UX Design	998314	IT design services	18%
Photography	998392	Photography and related services	18%
Videography / Video Editing	998392	Photography and videography services	18%
Social Media Management	998363	Advertising and related services	18%
Content Writing / Copywriting	998411	Writing, editing and related services	18%
Digital Marketing / SEO	998363	Advertising and related services	18%
Software Development	998314	IT and software development services	18%
Mobile App Development	998314	IT design and development services	18%
Interior Design	998322	Architectural, interior design services	18%
Architecture	998321	Architectural services	18%
Event Management	998555	Event management services	18%
Management Consulting	998311	Management consulting services	18%

Important

While most creative services are 18%, always confirm the exact rate for your specific service with your CA. Rates can change in Budget announcements. Using an incorrect SAC code won't typically cause immediate problems, but using an incorrect rate will.

4. TDS Section 194J: When Clients Deduct Tax

TDS (Tax Deducted at Source) under Section 194J applies when your client (a company or firm) pays you for professional or technical services. This is extremely common for freelancers.

What it means	Detail
Rate	10% of the invoice amount (excluding GST)
Threshold	Applies if you earn more than ₹30,000 from a single client in a year
Who deducts	Your client deducts 10% and deposits it with the Income Tax department
What you receive	Invoice amount minus 10% TDS (you claim it back when filing ITR)
Applies to	Companies, firms, LLPs paying for professional/technical services
Does NOT apply	Individuals and HUFs not subject to tax audit

Practical example

You invoice a Mumbai startup for ₹50,000 (base) + ₹9,000 GST = ₹59,000 total.

Client deducts TDS: ₹5,000 (10% of ₹50,000)
Client pays you: ₹54,000 (₹59,000 − ₹5,000 TDS)
GST is always paid in full — TDS does not apply to the GST component
You claim the ₹5,000 TDS back when filing your ITR (it offsets your tax liability)

On your invoice

Always mention the TDS clause on your invoice: "Subject to TDS deduction under Section 194J @ 10%". Mitti adds this automatically when you enable TDS in the form.

5. What a Proper GST Invoice Looks Like

Under GST rules, your tax invoice must include:

Supplier name, address, and GSTIN
Invoice number and date (sequential, unique)
Recipient name, address, and GSTIN (if registered)
Place of supply (the state where your client is)
HSN/SAC code for each service
Service description
Taxable value (base amount)
GST rate and amount (CGST+SGST or IGST)
Total invoice value
Signature / digital signature

Tip

Mitti Invoice generates a compliant GST invoice with all required fields, correct tax split (intra vs inter-state), SAC code, and TDS notation. Try it free →

6. If Your Client is Overseas (Zero-Rated Exports)

If you provide services to a client outside India and receive payment in foreign currency (USD, EUR, etc.), your service qualifies as an export of service and is zero-rated under GST.

Two options:

Export with LUT (Letter of Undertaking): Apply for LUT on the GST portal (free, annual). Then you can export without paying IGST. Your invoice shows zero GST. This is what most freelancers use.
Export with IGST: Pay IGST upfront and claim a refund later. More paperwork — usually not preferred.

Practical

If you frequently work with overseas clients, file for LUT at the start of each financial year. It takes 1–2 days on the GST portal and saves you from charging IGST (which foreign clients can't claim back anyway).

7. Composition Scheme — Is It For You?

The Composition Scheme allows small businesses to pay GST at a flat rate (1–6%) on turnover instead of 18%, but comes with restrictions:

You cannot issue a proper tax invoice — only a "bill of supply"
Your clients cannot claim input tax credit from your invoices
You cannot provide inter-state services
You cannot export services
Annual turnover must be below ₹50 lakh (for service providers)

For most freelancers: avoid composition scheme. If you work with businesses (they're your typical B2B client), they need to claim ITC on your invoice. The composition scheme breaks that. Only consider it if you exclusively serve individuals (B2C) who won't claim ITC.

8. Quick Checklist

Turnover > ₹20L/year → mandatory GST registration
Inter-state clients → GST registration mandatory regardless of turnover
Same state as client → use CGST + SGST (split equally)
Different state as client → use IGST (full rate, single line)
Overseas client → zero-rated export (get LUT first)
Client is a company → check if TDS 194J applies (usually yes)
Always include SAC code on your invoice
File GSTR-1 and GSTR-3B every month once registered
Keep invoice records for 6 years

Generate a GST-compliant invoice or proposal in 60 seconds

Mitti automatically detects CGST/SGST vs IGST, fills in SAC codes, calculates TDS, and formats your document correctly. Free to try.

Generate a document →

Disclaimer: This guide is for general information only and does not constitute professional tax advice. Tax laws change — consult a CA or tax professional for your specific situation. Mitti is not responsible for any tax decisions made based on this guide.