GST registration for freelancers: the inter-state myth

Ask around and you will hear the same line from three different people: bill a client in another state and GST registration becomes compulsory, whatever the size of the invoice. It gets repeated so often that freelancers register defensively, months before their turnover gives them any reason to. For most service-only freelancers, that advice is wrong.

What section 24 says on its own

Section 24(i) of the CGST Act lists inter-state suppliers as a category required to register regardless of turnover. Read in isolation, it looks absolute: sell across a state line and the ₹20 lakh general threshold that protects smaller businesses stops applying to you. Read on its own, the section is not the whole rule.

The notification that carves services back out

That notification exempts anyone making inter-state supplies of taxable services from registering at all, as long as aggregate turnover computed across India stays under ₹20 lakh in the financial year. Special category states other than Jammu and Kashmir get a lower line, ₹10 lakh. A designer working from Bangalore who bills a client in Mumbai and stays under that figure has nothing to register. The client sitting in a different state changes nothing about the obligation.

Services only. Read that word twice if you sell anything physical.

The notification names taxable services specifically. A freelancer selling design work, writing, consulting or software services across state lines gets the benefit of it. Someone shipping a physical product to a buyer in another state does not; section 24(i) applies to inter-state goods suppliers at full strength, with no turnover floor protecting them. If your work involves handing over anything you can put in a box, this article is not about you.

The turnover figure counts more than most freelancers assume

Aggregate turnover is computed against your PAN, across every state you bill from, and it counts exempt supplies and exports of services alongside your taxable domestic billing. A freelancer who bills ₹8 lakh from Indian clients and ₹15 lakh from a client abroad has ₹23 lakh in aggregate turnover, even though the export portion carries no GST at all. That crosses the ₹20 lakh line and takes the exemption away, whatever the actual GST any of it would generate.

What this actually means for you

• If every client you bill sits inside India, aggregate turnover is roughly your total billing for the year. Track it against ₹20 lakh, or ₹10 lakh in the applicable special category states.
• If any client sits abroad, add that income in too before deciding you are under the line.
• Selling goods across a state border removes the exemption entirely. Services are what the notification protects.
• Being under the threshold means registration is not compulsory. Registering anyway is still allowed, and some freelancers do it because a client's vendor form asks for a GSTIN before it asks anything else.

BuildWright works out where your billing actually sits against this threshold before recommending registration either way, and files it once the answer says you should.