GST (Goods & Services Tax) is an umbrella of taxes as it subsumed most of the indirect taxes in India. GST is to be collected from the patrons and paid to the credit of the government on the supply of goods and services.
Under previous tax regime, content writers were paying service tax at 15% subject to basic exemption limit of ₹ 10 lakh.
Though, most of the content writers haven’t registered themselves under the previous service tax system because there was no proper mechanism in the service tax laws under which they could be caught. Hence, they were enjoying the government ignorance.
But with the implementation of GST in India, if a person being a content writer don’t comply with GST rules and regulations, then he might end up with lots of legal and financial troubles.
GST Registration for Content Writers
As per Goods and Service Tax laws, any person supplying goods or service subject to the basic exemption limit is required to get himself registered under the GST. However, for content writers, there are two categories:
- Where the content writer has all his clients from his own state and his earnings is more than ₹ 20 lakh then he is required to pay GST on his services and to get himself registered.
- Where the content writer is having even a single client outside the state: If the content writer is earning even a single penny out of his content writing from outside the state, then he will be required GST registration in India, and he will be ineligible for the basic exemption limit of ₹ 20 lakh.
Reverse charge under GST if you are not registered
If the content writer is not registered under GST, then no company might appoint him as a content writer.
As per the GST law, if a person avails any services from a service provider who is not registered under GST, then the recipient of such services shall be liable to pay the imposed GST to the government on behalf of the unregistered service provider.
Hence, even if the content writer who is eligible for the basic exemption of ₹ 20 lakh, still be required to get register under GST to get clients.
Penalty for Non-Registration
Failure to take registration under GST, where a person fails to get register under GST, then he shall be liable for two penalties:
- 1.Penalty Up to ₹ 25,000 for not registering under GST.
- ₹ 100 per day for not filing return.
No Exemption of ₹ 20 Lakh (Threshold Limit) for Content writers
As mentioned above, where a content writer is deriving his income from outside the State or from outside India, then the exemption limit of ₹ 20 lakh will not sustain.
How will the content writers be taxed under GST?
Any person being a content writer shall be liable to pay (GST) tax at 18% (9% CGST and 9% SGST/UGST) on services with full Input Tax Credit. Full Input Tax Credit means the GST paid on any input service can be adjusted against the output tax liability.
- Central GST and State GST to be levied if the service provider ( Content Writer) and client are from same state (9% CGST and 9% SGST)
- Integrated GST to be levied if service provider and client are from different states (18% IGST)
If the content writer is providing service to a client located outside India, whether it can be considered as export of service?
A service provided by the content writer can be considered as export of services only on fulfillment of the following conditions:
- The supplier of the service (content writer) is located in India.
- The location of the recipient of service is outside India.
- The place of supply of service is any place outside India.
- The payment received by the service provider (content writer) from his client is in convertible foreign exchange.
Compliances after GST registration for Content writers
Once a content writer is registered under GST, he will be required to comply with the following every month
1. He must maintain a register for all his input and output services.
2. He must Issue tax invoice for every payment received.
3. He must upload each invoice issued by him to the government.
4. He is required to file three monthly returns (GSTR-1, GSTR-2, GSTR-3).
- GSTR-1 is a monthly statement of outward supplies of goods or services. This return is to be mandatorily filed by a registered taxable person (content writer) on 10th of every month.
- GSTR-2 is a monthly statement of inward supplies of goods or services. This return is to be mandatorily filed by a registered taxable person (content writer) on 15th of every month.
- GSTR-3 is a consolidated return of GSTR-1 & GSTR-2. A monthly return filed by a registered taxable person from outward supplies (auto-populated from GSTR-1) & inward supplies (auto-populated from GSTR-2) of goods or services, ITC availed, Tax Payable, Tax Paid (Using both Cash and ITC) on 20th of every month.
5. He must pay all the due tax before the 20th of the following month.
Section 2(67) of the CGST Act 2017, defines “inward supply” in relation to a person, shall mean receipt of goods or services or both whether by purchase, acquisition or any other means with or without consideration;
Section 2(83) of the CGST Act 2017, defines “outward supply” in relation to a taxable person, means supply of goods or services or both, whether by sale, transfer, barter, exchange, licence, rental, lease or disposal or any other mode, made or agreed to be made by such person in the course or furtherance of business;
Note: The above compliance may vary depending upon the fact of the case.
Composition scheme for content writers
Composition scheme under GST is the benefit extended to the SMEs so that they can be prevented from massive procedural compliances every month. However, unfortunately, the GST composition scheme is not applicable to services providers (subject to the composite providers like restaurant owners), and hence, content writers shall be required to pay GST normally, and no benefit of this scheme is available to them.
In this write-up, the writer focuses on how the new indirect tax law (GST) will impact the content writers and how they can prepare themselves for GST. To avoid any future complication, it is recommended that one should take the help of an expert and save himself from the claws of this stringent tax.