Agency CRMCGST, SGST or IGST: which goes on a freelancer's invoice?
If you are GST-registered, every invoice you send needs the right kind of GST on it. Get it wrong and your client may not be able to claim the credit, which usually ends with you reissuing the invoice. The rule is simpler than it looks.
The one question that decides it
Is the place of supply in your state or not?
For most services, the place of supply is where your client is. So in practice you compare two states: yours and your client’s.
| Your client is in | Tax on the invoice | At 18% |
|---|---|---|
| The same state as you | CGST + SGST | 9% + 9% |
| A different state | IGST | 18% |
| Outside India, and you have a LUT | None (zero-rated) | 0% |
| Outside India, and you have no LUT | IGST | 18% |
The total tax is the same either way. Only the split, and which government receives it, changes.
Three examples
A designer in Chennai bills a clinic in Coimbatore. Both are in Tamil Nadu. On a ₹50,000 fee the invoice shows CGST ₹4,500 and SGST ₹4,500, total ₹59,000.
The same designer bills a startup in Bengaluru. Tamil Nadu to Karnataka is a different state. The invoice shows IGST ₹9,000, total ₹59,000.
The same designer bills a company in the US in dollars. This is an export of services. With a Letter of Undertaking (LUT) on file, no GST is charged and the invoice carries a line saying the supply is an export under LUT. Without a LUT, IGST is charged and can be claimed back as a refund later.
How to tell which state your client is in
- If the client has a GSTIN, its first two digits are the state code: 33 is Tamil Nadu, 29 is Karnataka, 27 is Maharashtra, 07 is Delhi.
- If they have no GSTIN, use the state in their address.
- If you don’t know their address, the place of supply falls back to your own location, so you charge CGST + SGST. Note that on the invoice.
A client with offices in several states has a different GSTIN for each. Use the GSTIN of the office you are actually billing.
What if you aren’t registered?
Then none of this applies. You issue a plain invoice with no GST at all, and you must not show or collect tax. If you later cross the registration threshold or register voluntarily, your new invoices become tax invoices from that date.
Common mistakes
- Charging CGST + SGST to a client in another state. The most common error. The client cannot claim that credit.
- Splitting the rate unevenly. CGST and SGST are always equal halves.
- Charging GST on an export when you hold a LUT, or forgetting the LUT wording on the invoice.
- Using the wrong GSTIN for a client with several registrations.
- Leaving out the place of supply. A tax invoice must state it.
Let the invoice decide
This is a rule a computer can apply every time without slipping. Our free GST invoice generator reads the two states and picks CGST + SGST or IGST for you, and the GST calculator shows the split for any amount.
This article explains the general rule for services. It isn’t tax advice; some services have special place-of-supply rules, so check with a chartered accountant if yours is unusual.