This quarter you collected ₹18,000 of GST and paid ₹4,000 of GST on business purchases. What do you deposit?

₹18,000 — the ₹4,000 reduces income tax instead

₹22,000 — both amounts are payable

An unregistered freelancer wants to add "18% GST" to invoices because clients never check. What is the rule?

Not allowed — only a registered person may collect GST, and collected tax has to be deposited

Allowed, as long as the clients agree

Allowed if the money is honestly set aside

Lesson 2 of 2 · 8 min

Rates, invoices and input tax credit

Most freelance services sit at 18%. A proper tax invoice, the CGST/SGST vs IGST split, and how credit for GST you paid nets off what you collect.

Since the September 2025 rationalisation, the main GST rates are 0%, 5% and 18%, with a 40% rate on a narrow demerit and luxury list. Most freelance services sit at 18% — but rates moved in 2025, so check the rate for your specific service instead of assuming.

On an invoice within your own state the tax splits into CGST and SGST halves; across state lines it appears as a single IGST line. Same total either way.

What a proper tax invoice carries

Line on the invoice	Why it is there
Your GSTIN	The registration number the tax is collected under. No GSTIN, no right to collect GST.
Invoice number and date	A consecutive series — gaps and repeats are what return-matching flags.
Client's GSTIN, for business clients	Their input tax credit depends on it, which is why their accounts team checks your invoice carefully.
SAC code for the service	The classification code that determines which rate applies.
Taxable value, then CGST + SGST or IGST	Tax shown separately from your fee — the split depends on whether the supply crosses a state line.

Your turn

You are registered, and you invoice ₹50,000 for a brand film within your state at 18%. How much GST goes on the invoice, in rupees?

Input tax credit is the netting that makes GST a tax on value added rather than a tax on tax. The GST you paid on business purchases — editing software, a camera, studio rent — becomes a credit against the GST you collected.

Collect ₹18,000 on your invoices, hold ₹4,000 of credit from your own purchases, and you deposit only the ₹14,000 difference.

Your turn

This quarter you collected ₹18,000 of GST from clients and paid ₹4,000 of GST on business purchases. How much do you deposit with the government, in rupees?

Composition-style schemes vs regular registration — the intuition

For services there is a flat-rate scheme of this kind at 6% for turnover up to ₹50 lakh. Trade-off in one line: flat-rate simplicity suits sellers to consumers; regular registration suits work for business clients, who want the credit your invoice gives them.
Feature	Composition-style (flat rate)	Regular
How tax is paid	A small flat percentage of turnover, out of your own pocket	Charged on each invoice at the applicable rate, collected from the client
Collecting GST from clients	Not allowed — the invoice shows no tax	Required on every taxable supply
Input tax credit	None, on either side — business clients also get no credit from you	You claim credit on purchases; business clients claim credit on your invoice
Paperwork	Lighter, with simpler returns	Regular return filing for as long as you stay registered

Spot the scam · Direct message

The 'free 18%' shortcut

bro just add 18% GST on your invoices even without registering 😅 clients never check, its free money. i've been doing it a year, one client even claims it back so everyone wins

Work it out yourself

Flip between GST-inclusive and GST-exclusive pricing and watch the CGST/SGST vs IGST split — quoting '₹50,000 plus GST' and '₹50,000 all-in' are very different fees.

GST Calculator

Match them up

Six words on a GST invoice

Pick a term, then pick what it actually means.

Pick a term on the left.

Check yourself

1 / 3

Kabir asks

You invoice ₹50,000 at 18% within your own state. How does the ₹9,000 appear?

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