CA & Exam Prep
5 min read
- By Saumya Mishra
GST in 10 Minutes: What Every CA Intermediate Student Needs
GST. 18%. Everyone has heard of it. Few freelancers actually understand the flow: the client pays GST to you; you pay the net to the government; you keep the input credits. It is VAT, re-named with a pan-India scope. Knowing the flow makes the compliance trivial; not knowing it turns GST into a hidden 18% drag on freelance margins. First-time freelancer registrations typically happen 3-6 months AFTER crossing Rs. 20L. By which time back-charges and penalties have accrued.
By the end, you will understand GST as a tax on value added (not revenue), the input-credit flow that makes it efficient, the three return forms (GSTR-1, 3B, 9), and the state-wise threshold logic.
The one-minute flow
You invoice client Rs. 1,00,000 + 18% GST = Rs. 1,18,000. You received Rs. 18,000 of GST collected from the client, on behalf of government. In the same month, you bought services (cloud subscription, laptop, co-working space) costing Rs. 50,000 + 18% GST = Rs. 59,000. You paid Rs. 9,000 GST to those vendors. That is your "input credit" (ITC). Net GST to deposit with government: Rs. 18,000 collected - Rs. 9,000 input = Rs. 9,000. The tax is effectively on VALUE ADDED (Rs. 50,000 x 18% = Rs. 9,000). Your margin, not your gross.
The input-credit mechanism is what makes GST "non-cascading". Previously (service tax + VAT era), each layer of the supply chain paid tax on the full invoice value, so taxes compounded. GST taxes only the value ADDED at each link. For a freelancer with Rs. 50L revenue and Rs. 20L in business expenses, effective GST paid = Rs. 5.4L (18% of Rs. 30L value added) not Rs. 9L (18% of Rs. 50L).
Thresholds. The state-wise logic
GST registration is mandatory when aggregate turnover (all-India, all-brands) exceeds: (a) Rs. 20 lakh for services in most states, (b) Rs. 10 lakh for services in special-category states (Arunachal, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh, Uttarakhand, J&K), (c) Rs. 40 lakh for goods-only suppliers in most states, (d) Rs. 20 lakh for goods in special-category states. Mixed services + goods = lower of the two thresholds applies. Aggregate turnover means PAN-level total, not per-state. Even if you have only Rs. 5L in Maharashtra but Rs. 25L in Karnataka, you must register in Maharashtra.
Voluntary registration (below threshold): you can register voluntarily to claim input credit on business expenses. Useful if most clients are B2B (they can claim your GST as their input) and your input costs are high (cloud tooling, equipment).
Three return forms
- GSTR-1: outward supplies (sales). Filed monthly for turnover > Rs. 5 crore; quarterly with monthly payment (QRMP scheme) for < Rs. 5 crore. Contains every invoice issued.
- GSTR-3B: summary + payment of net GST. Filed monthly regardless of size. Tax paid here.
- GSTR-9: annual return. Due 31 December of next financial year. Reconciles full year; required for > Rs. 2 crore turnover.
Input credit blocked on personal items
Input credit blocked on personal items
Aggregate turnover is PAN-level
QRMP scheme for small taxpayers
Key Takeaways
- GST is a tax on value added, not revenue.
- Claim input credit on business inputs; net payable = GST collected - input credit.
- GSTR-1 (outward supplies) + GSTR-3B (summary + payment) + GSTR-9 (annual).
- Threshold: Rs. 20L for services (most states); Rs. 40L for goods; Rs. 10L/Rs. 20L special-category states.
- Composition scheme: flat 1-5% for micro-businesses with no input credit (see next article).
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