Introduction

Freelancers and consultants often work with clients located in different states and countries. Under GST, determining the correct tax treatment depends largely on the "Place of Supply" (POS) provisions of the Integrated Goods and Services Tax (IGST) Act, 2017.

The place of supply decides whether a transaction will attract:

• CGST + SGST (intra-state supply)

• IGST (inter-state supply)

• Zero-rated treatment as export of services

Understanding these rules is critical for avoiding incorrect GST invoicing, tax notices, and compliance issues.

What is Place of Supply?

Place of Supply refers to the location where a service is deemed to be consumed under GST law.

For freelancers and consultants, place of supply determines:

• Type of GST to be charged

• Whether the supply is intra-state or inter-state

• Eligibility for export benefits

• GST registration implications

For most consulting and professional services, the general place of supply rule applies.

General Rule for Services Within India

When both the supplier and recipient are located in India:

Services to a Registered Person (B2B)

Place of supply = Location of the recipient.

Services to an Unregistered Person (B2C)

Place of supply = Location of the recipient if the address is available; otherwise, location of the supplier.

Freelancer in Delhi Serving a Client in Maharashtra

Example

• Freelancer Location: Delhi

• Client GST Registration: Maharashtra

Place of Supply = Maharashtra

Since supplier and place of supply are in different states, the transaction becomes an inter-state supply and IGST is chargeable.

Invoice

Consulting Fee: ₹1,00,000

IGST @ 18% = ₹18,000

Invoice Value = ₹1,18,000

Freelancer and Client in Same State

Example

• Freelancer: Delhi

• Client: Delhi

Place of Supply = Delhi

Since supplier location and place of supply are in the same state, CGST and SGST are applicable.

Invoice

Consulting Fee: ₹1,00,000

CGST @ 9% = ₹9,000

SGST @ 9% = ₹9,000

Total Invoice = ₹1,18,000

Place of Supply for Foreign Clients

When either the supplier or recipient is located outside India, Section 13 of the IGST Act applies. Under the general rule, the place of supply is the location of the recipient of services.

Example

• Freelancer: India

• Client: USA

• Service: Digital marketing, software development, consulting

Place of Supply = USA

If all export conditions are fulfilled, the transaction qualifies as export of services and becomes a zero-rated supply under GST.

Conditions for Export of Services

A service is generally treated as an export when:

1. Supplier is located in India.

2. Recipient is located outside India.

3. Place of supply is outside India.

4. Payment is received in convertible foreign exchange or permitted INR.

5. Supplier and recipient are not merely establishments of the same entity.

GST on Freelancing for Foreign Clients

Option 1: LUT Route

Freelancer files LUT and exports services without payment of IGST.

Option 2: IGST Route

Freelancer pays IGST on export and subsequently claims a refund.

Most freelancers prefer the LUT route because it avoids working-capital blockage.

Common Consultancy Services Covered

The general place of supply rule usually applies to:

• Management consulting

• Tax consultancy

• Accounting services

• Digital marketing

• Graphic designing

• Software development

• IT consulting

• Content writing

• Business advisory

• Virtual assistance

For these services, the recipient's location generally determines the place of supply.

Special Cases

Services Related to Immovable Property

Place of supply = Location of the property.

Example:

A Delhi architect designing a property located in Bengaluru will have Bengaluru as the place of supply.

Training Services

For registered recipients, place of supply is the recipient's location. Special rules may apply depending on the nature of training.

Intermediary Services – Important Caution

Many consultants working on a principal-to-principal basis are not intermediaries. An intermediary generally arranges or facilitates a supply between two other parties rather than providing the main service on its own account. Misclassification can significantly affect GST treatment.

Quick Reference Table

Compliance Checklist for Freelancers

✓ Obtain GST registration if required.

✓ Mention correct GSTIN on invoices.

✓ Determine place of supply before invoicing.

✓ Charge CGST/SGST or IGST correctly.

✓ File LUT for export services.

✓ Maintain foreign remittance records.

✓ Reconcile invoices with GST returns.

✓ Preserve contracts and service agreements.

Conclusion

For most freelancers and consultants, the place of supply is determined by the location of the recipient. If the client is located in another state, IGST generally applies. If the client is outside India and export conditions are satisfied, the service may qualify as a zero-rated export.

Correct determination of the place of supply is one of the most important aspects of GST compliance for professionals, as it directly affects tax liability, invoicing, and refund eligibility.