Service Tax for Freelancers in India

In Asia, There are essentially 119 solutions which are nonexempt and pointed out in Section 65(105) associated with finance act, 1994.

I’m not probably explore the 119 service, but i shall explore one service which can be pointed out in Taxable service 54. which can be only “on the web Ideas & Database Access or Retrieval Service” you can also say Blogging, freelancing, online work, web business etc.

Whether you are a freelancer, Blogger or perhaps you are using any business where you tend to be transferring or obtaining information in digital form on the web comes under this kind of service.

Current accounting rules for this service tend to be:



Bookkeeping rules are used by Indian national understand the sort of service and offer an exact percentage of income tax placed on this kind of service.

How to determine rate of income tax

It really is an appealing question understand “How to determine the rate of tax”. Our government has not established just one advanced level form of service income tax calculator till now and we also have merged ourselves when you look at the plethora of boring and time-consuming calculations.

Just check the points pointed out below:

1. Service income tax is applicable on 10% associated with value of solutions and possesses signal 00440153.

2. Education cess is applicable on 2% associated with service income tax payable. Just concentrate on the wordings, Im saying that its applicable on 2% associated with service income tax payable. It indicates that after determining income tax in Step 1. You need to apply 2% onto it. It’s signal no. 00440298.


Let’s consider that you have offered solutions of 10,000. income tax payable on service = 1000 Education cess = 2% of 1000 = 20

3. Additional and H. is applicable on 1 % of service income tax payable.

4. Various other penalty/interest – As applicable and possesses signal no. 00440154

In a budget address our Finance minister had launched that brand-new income tax on solutions after incorporating swachh bharat cess (clean Asia cess) is 14.5% +.5% (Krishi Cess)

So, if you should be unaware of the definition of export of service after that get ready to cover the service income tax 15 %

But, wait an extra. I am going to explain the Export of service in more detail which will be good for my all on the web brothers!!!

In accordance with Rule 6A (1) associated with Service Tax Rules, your service is treated as export of service if it employs points a to f when you look at the after way:

a. If you’re the supplier associated with service then you definitely should-be situated in nonexempt area.


If you’re blogger, freelancer, digital business owner in Asia then you’re automatically after point no. a

b. Recipient associated with service situated outside Asia.

It indicates that the service receiver should-be situated outside Asia.

Including. Bloggers tend to be earning money in the shape of affiliate marketer, AdSense etc. Google Inc. is automatically prone to pay service income tax. You may be free of service income tax.

Freelancers tend to be making in the shape of their customers using the internet. If for example the clients tend to be situated outside Asia then there is you don’t need to pay service income tax. If your customer can be found in Asia on the web then you’re prone to pay service income tax.

Digital Entrepreneurs

Digital business owner is a fresh term that is surrounding in this brand-new era. If you’re working on the internet and your Client is situated outside Asia and you are obtaining service from your own freelancers based outside Asia via on the web medium. It indicates you are acting as an on-line contractor.

You don’t even to cover just one penny as a service income tax. As Employment income tax is circumstances income tax, you will be free of other taxes additionally.

If your customer can be found in Asia along with your staff member will also be located in Asia as a freelancer.Then you’re entitled to Service Tax Act.

In today’s situation, Our Esteemed Prime Minister Shri. Narendra Modi had established a scheme for Asia which can be “Start Up- Stand Up”.

In this system, when you have brand-new concept then you’re automatically entitled to advantages such as for example:

1. Effortless Loan Procedure.

2. Effortless Patent Registration Procedure.

3. Effortless Trademark Procedure.

4. Free from Income Tax – Various Other Work Taxation.

5. Effortless exit.

and various various other advantages which can not explain by words.

The service is not a service specified in Section 66D with this act which can be referred to as negative listing of this act.

d. The repayment associated with service happens to be obtained by the supplier associated with service in convertible currency exchange and

age. The supplier associated with service therefore the person associated with service aren’t simply organization of a distinct individual prior to product (b) of Explanation 2 of clause (44) of area 65B associated with Act.


This post is for information functions only and does not represent any appropriate advice/suggestion etc. I’m not in charge of any action taken by you after looking over this post.

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