15 Dec 2017Posted By: Pooja

PayPal has started charging 18% GST for its services.

Freelance is now a common term in the country with a number of people entering and dealing with it. Before the Goods and Services Tax, there wasn’t a rule or law for freelancers, but the new indirect tax has put a slab on them. The renowned international Money transferring Company has now started charging 18% GST for the services it provides.  

GST for freelancers as a positive move.

The advent of GST in the world of freelancing has brought out some of the impacts for freelancers. PayPal too has started an 18% tax charge. Let us have a look at what are good moves after the same.

PayPal after GST

To make it as per the tune of Goods and Services Tax law in India, American online payments system has started levying 18% charge, effective from November 1, 2017. The new PayPal move has however exempted purchasing from the platform.

Based on the GST registration details provided by the user, a tax invoice shall be issued by PayPal. Also, it is recommended and advised to give correct GSTIN (Goods and Services Tax Identification Number) in order to claim input tax credit. This reform if applicable in all the international and domestic cases, as well as for business and individual accounts registered in the country.

Positive impacts on Freelancers

This move for freelancers has come up with few of the positive impacts. They are as follows:

  • Freelancers can now avail the input of credit, in case a freelance worker is planning to shift from the exemption category to the taxable category.


  • Under the Indirect Tax regime, a freelancer is able to exempt from the turnover of 20 Lakh. Previously it is was 10 Lakh.


  • The input tax credit of Central GST/ State GST/ Integrated GST on a purchase of goods or capital shall be deemed under the GST, unlike the previous Taxation system of Value Added service/ Central Sales tax/ Excise paid on the same.


  • Previously the freelancers who are into software services had to pay Service Tax and Value Added Tax. Now the GST has brought both the charge into one taxation system.  


Negative impacts on Freelancers

Several negative impacts also took place after the move form the GST Council. Negative impacts on Freelancers are as follows:

  • It is speculated that the tax charge will be levied higher, with a rate of 18 percent unlike the previous service tax of 15 percent. This shall increase the tax amount


  • Freelancers working in different states of the country shall have to be charged as per the Central GST/State GST are the states respectively. Hence there is no centralized registration such.


  • Since GST is a law of records, Freelancers who were previously free in a way might feel a burden by being more compliant as per the Indirect Tax. Regular filing of returns may be something not their cup of tea.


  • Under Goods and Services Tax, any service or supply made without considered deemed to be liable to tax. In this way, Freelances shall have to pay tax for even the free services. 


Freelancing is still an emerging industry and a lot of people jumping into Freelancing as to avoid a daily headache. This move from the GST council has both impacts but it has been marked a good move as in total, which brings out the transparency and other relevant aspects as well. Whether the tax slab goes to the exemption of more than the turnover of 20 lakh or merging more than singular tax into a single tax, this move has been a part of venturing Freelancers into high scales. 


In case you need assistance with on GST you can fill out our inquiry form and arrange a call from E-Startupindia business advisors at 8881069069.

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