Freelancer Invoice
Freelancer Invoice
A freelancer invoice is a legally valid document that a self-employed individual — a designer, developer, writer, consultant, photographer, or any independent professional — sends to a client to request payment for work completed. It records what was delivered, the agreed price, the applicable taxes, and the deadline for payment. In India, a freelancer invoice is not just a payment request — it is a tax document. Its format, fields, and content are governed by rules under the GST Act, the Income Tax Act, and FEMA, depending on who your client is and whether you are registered under GST.
Getting your freelancer invoice right matters for three reasons: your client can only claim GST Input Tax Credit (ITC) if your invoice is correctly formatted; TDS is deducted on the invoice amount by domestic companies; and your invoice is the primary document that links your work to a foreign payment if you have international clients.
Quick reference
| Mandatory GST registration threshold | ₹20 lakh annual turnover (₹10 lakh in special category states) |
| Mandatory GST registration for exports | Required regardless of turnover if services are exported outside India |
| GST rate on professional services | 18% |
| Document type for GST-registered freelancer | Tax Invoice |
| Document type for non-GST freelancer | Invoice or Bill (not a "Tax Invoice") |
| SAC code mandatory | Yes, for all GST-registered freelancers under Rule 46, CGST Rules |
| TDS by domestic clients | 10% under Section 194J if payment exceeds ₹30,000 in a financial year |
| TDS by foreign clients | Not applicable — foreign clients are outside the Indian tax net |
| Invoice number format | Sequential, unique, max 16 characters, alphanumeric/hyphen/slash only |
| Invoice to be issued within | 30 days of service completion (for regular taxpayers) |
| Place of supply for foreign client | Location outside India — makes the service zero-rated for GST |
| Recommended payment terms | Net 15 or Net 30 with an actual calendar due date written on the invoice |
Two types of freelancer invoices in India
In India, a freelancer's invoice format is determined primarily by one factor: whether you are registered under GST or not.
| Tax Invoice (GST-registered freelancer) | Invoice / Bill (Non-GST freelancer) | |
|---|---|---|
| Who issues it | Freelancers with GST registration (GSTIN) | Freelancers below ₹20 lakh annual threshold |
| Includes GSTIN | Yes — your GSTIN must appear on every invoice | No |
| Includes tax fields | Yes — CGST + SGST (intra-state) or IGST (inter-state) at 18% | No tax fields |
| SAC code required | Yes, mandatory under Rule 46 | Not required |
| Client can claim ITC | Yes, if client is GST-registered | No ITC available to client |
| Must say "Tax Invoice" | Yes, this exact heading is required | Must NOT say "Tax Invoice" |
| Declaration required | Not required | Yes — state that GST is not applicable |
Important: Even if you are below the ₹20 lakh threshold, you must register for GST and charge GST if your services are exported to clients outside India. The threshold exemption does not apply to export of services.
Mandatory fields on a freelancer invoice (Rule 46, CGST Rules)
For GST-registered freelancers, Rule 46 of the CGST Rules, 2017 prescribes the exact fields a Tax Invoice must contain. Missing any of these makes your invoice non-compliant and your client cannot claim ITC on it.
| # | Field | What to include |
|---|---|---|
| 1 | Heading | The words "Tax Invoice" |
| 2 | Your name | Your full legal name or business name |
| 3 | Your address | Your complete registered address |
| 4 | Your GSTIN | Your 15-digit GST Identification Number |
| 5 | Invoice number | Sequential, unique, max 16 characters, same series within one financial year |
| 6 | Invoice date | Date of issue |
| 7 | Client name | Full name of the client |
| 8 | Client address | Complete billing address |
| 9 | Client GSTIN | Required for B2B invoices where client is GST-registered |
| 10 | Place of supply | The state where the service is consumed (determines CGST+SGST vs IGST) |
| 11 | Service description | Clear description of what was delivered |
| 12 | SAC code | Service Accounting Code for your type of work |
| 13 | Taxable value | The amount before GST |
| 14 | GST rate | 18% for most professional services |
| 15 | Tax amount | CGST + SGST (9% + 9%) for intra-state, or IGST (18%) for inter-state |
| 16 | Total amount | Taxable value + GST |
For non-GST freelancers, there is no prescribed government format, but your invoice must include your name, address, PAN, invoice number, date, client details, service description, amount, and a declaration that GST is not applicable.
SAC codes for common freelance services
Every GST-registered freelancer must quote the correct SAC (Service Accounting Code) on their invoice. Here are the most commonly used codes:
| Freelance type | SAC code | Description |
|---|---|---|
| Web developer / software developer | 998314 | IT design and development services |
| IT consultant | 998313 | IT infrastructure and network management |
| Graphic designer / UI-UX designer | 998392 | Original works of authors, composers, and other artists |
| Content writer / copywriter | 998411 | News agency services / original content creation |
| Management / business consultant | 998311 | Management consulting and management services |
| Digital marketing / SEO | 998361 | Advertising services |
| Accountant / CA | 998221 | Accounting and bookkeeping services |
| Photographer / videographer | 999612 | Artistic creation services |
| Architect / interior designer | 998311 | Specialised design services |
| Translator | 998431 | Translation and interpretation services |
If you are unsure about your SAC code, use the SAC search on the GST portal or ask your CA. An incorrect SAC code on your invoice does not invalidate it, but it can raise questions during scrutiny.
Domestic client invoice vs foreign client invoice
How you invoice changes significantly based on whether your client is in India or outside India.
| Domestic client (India) | Foreign client (outside India) | |
|---|---|---|
| GST charged | 18% (CGST + SGST or IGST) | 0% — zero-rated if export conditions met |
| TDS deducted by client | Yes — 10% under Section 194J (above ₹30,000) | No — foreign clients are outside Indian tax net |
| Currency | INR | Foreign currency (USD, EUR, GBP, etc.) |
| Place of supply | Client's state in India | Outside India |
| LUT / IGST route | Not applicable | LUT recommended — raise zero-GST invoice |
| FIRC required | No | Yes — proof of foreign exchange receipt |
| GST return reporting | Report in GSTR-1, pay CGST/SGST or IGST | Report as zero-rated export in GSTR-1 |
| Income tax | Reported as professional income | Reported as professional income (foreign source) |
Understanding TDS on domestic freelance invoices
When an Indian company or GST-registered business pays you more than ₹30,000 in a financial year for professional services, they are required to deduct 10% TDS under Section 194J before paying you. This means:
- You raise an invoice for ₹50,000
- Your client pays you ₹45,000 (deducting ₹5,000 as TDS)
- The client deposits ₹5,000 to the income tax department against your PAN
- You receive a TDS certificate (Form 16A) from the client
- You claim the ₹5,000 as a tax credit when filing your ITR
Always ensure your PAN is printed on your invoice so the client can correctly deposit TDS against your account.
Understanding zero-rated GST on foreign client invoices
If all five conditions for export of services under the IGST Act are met — including the condition that payment is received in convertible foreign exchange — your service is zero-rated. You charge 0% GST on the invoice. There are two routes:
- LUT route (recommended): File a Letter of Undertaking on the GST portal before the financial year begins. Raise invoices with 0% GST. No upfront GST payment. No refund needed.
- Pay IGST and claim refund: Charge 18% IGST on the invoice, pay it, then file Form RFD-01 on the GST portal within 24 months to claim a refund. Poor cash flow — not recommended.
Step-by-step example: Rohan invoices two clients
Rohan is a freelance UI/UX designer in Bengaluru. He is GST-registered. He has two clients this month: an Indian startup and a German product company.
Invoice 1: Domestic client (Indian startup)
| Field | Value |
|---|---|
| Invoice heading | Tax Invoice |
| Invoice number | INV-2026-047 |
| Invoice date | 1st June 2026 |
| Client | TechBridge Solutions Pvt Ltd, Mumbai |
| Client GSTIN | 27AABCT1234D1Z5 |
| Place of supply | Maharashtra (27) |
| Service | UI/UX design for mobile app — May 2026 |
| SAC code | 998392 |
| Taxable value | ₹80,000 |
| IGST (18%) | ₹14,400 (inter-state: Rohan is in Karnataka, client in Maharashtra) |
| Total | ₹94,400 |
| Payment terms | Due by 16th June 2026 (Net 15) |
The startup pays Rohan ₹85,000 after deducting ₹9,400 as 10% TDS on the taxable amount. Rohan receives Form 16A and claims the TDS credit in his ITR.
Invoice 2: Foreign client (German company)
| Field | Value |
|---|---|
| Invoice heading | Tax Invoice |
| Invoice number | INV-2026-048 |
| Invoice date | 2nd June 2026 |
| Client | DesignFlow GmbH, Berlin, Germany |
| Place of supply | Outside India |
| Service | Product design consultancy — May 2026 |
| SAC code | 998392 |
| Taxable value | EUR 2,000 (approx. ₹1,80,000) |
| GST | Zero-rated export (LUT filed) |
| Total | EUR 2,000 |
| Payment terms | Due by 17th June 2026 |
No TDS is deducted by the German client. Rohan collects FIRC from his bank once payment arrives. He reports the invoice as a zero-rated export in GSTR-1.
Invoice numbering rules for freelancers
The GST Act requires invoice numbers to follow a specific format. Non-compliance is a common reason invoices are rejected by clients' accounts departments:
- Must be sequential and unique within a financial year (April to March)
- Maximum 16 characters
- Allowed characters: alphabets, numbers, hyphens (-), and forward slashes (/)
- Must reset at the start of each financial year (1st April)
- Can include letters for client or project identification (e.g. INV-2026-001, 2026-ABC-001)
- Cannot contain spaces or special characters
Good formats: INV-2026-001, FY26-047, ROH/2026/001
Invalid formats: Invoice #1, 2026.001, ROH 001 (space not allowed)
Payment terms for freelancers: best practices
How you write your payment terms directly affects how quickly you get paid.
Always write the actual due date, not just "Net 30". Many Indian clients — especially small business owners — do not know what "Net 30" means. "Payment due by 16th June 2026" is unambiguous.
For new clients, use shorter terms or take an advance. Net 15 or Net 7 is standard for new relationships. For projects above ₹50,000, take a 50% advance before starting. For unknown clients, "Due on receipt" is acceptable.
Add a late fee clause. A line such as "A late payment fee of 1.5% per month will apply after the due date" is a strong deterrent and is legally enforceable if it was agreed to in your contract or purchase order.
For domestic clients, mention TDS. Add a line: "TDS to be deducted at applicable rates under Section 194J. Kindly provide Form 16A." This sets the expectation and ensures your client knows the correct section.
For foreign clients, mention the currency and bank details clearly. Specify the currency (USD, EUR), your bank's SWIFT code, IBAN or account number, and the bank's name and address. Ambiguity in international payment details causes costly delays.
Non-GST freelancer invoice: what to include
If your annual turnover is below ₹20 lakh (₹10 lakh in special category states) and you are not registered under GST, your invoice:
- Must NOT be headed "Tax Invoice" — use "Invoice" or "Bill for Services"
- Must NOT contain any GST fields (no CGST, SGST, IGST amounts)
- Must include a declaration such as: "GST is not applicable as my annual turnover is below the threshold prescribed under Section 22 of the CGST Act, 2017."
- Must include your PAN — clients will need it for TDS deduction
- Must include sequential invoice numbers within the financial year
- Should include your name, address, service description, amount, and payment terms
Reminder: Once your turnover crosses ₹20 lakh (even ₹1 above), you must register for GST within 30 days and start issuing Tax Invoices from the date of registration. Invoices raised before registration do not need to be revised.
Common freelancer invoice mistakes in India
Not including SAC code. Without a SAC code, your GST-registered client's accounts team may reject your invoice or be unable to claim ITC. The SAC code is mandatory under Rule 46.
Using the heading "Tax Invoice" without GST registration. If you are not registered for GST, calling your invoice a "Tax Invoice" is legally incorrect. Use "Invoice" or "Bill for Services."
Not printing PAN on the invoice. Domestic clients deduct TDS and need your PAN to deposit it correctly. A missing PAN means TDS may be deposited under the wrong account — or at a higher rate of 20% if PAN is not provided.
Not specifying place of supply. The place of supply determines whether CGST + SGST or IGST applies. If you write the wrong state or leave it blank, the wrong tax is charged, and your client cannot claim ITC correctly.
Writing "Net 30" without the actual date. Many Indian clients do not act on "Net 30". Write the calendar date. It is harder to ignore and is easier to follow up on if payment is delayed.
Charging GST on foreign client invoices. If your service qualifies as an export and you have filed an LUT, you must issue a zero-GST invoice. Charging 18% IGST on a foreign client invoice is incorrect and creates unnecessary refund paperwork.
Starting invoice numbers from 1 in the middle of the year. Invoice numbers must be sequential from 1st April. If you switch tools mid-year and restart from 001, your invoice series is non-compliant.
Not collecting Form 16A from domestic clients. After TDS is deducted, clients must give you Form 16A every quarter. Many freelancers forget to collect it and then cannot claim the TDS credit in their ITR. Always follow up for Form 16A.
Frequently asked questions
What is a freelancer invoice?
A freelancer invoice is a formal payment request document that a self-employed professional sends to a client after completing work. In India, it records the service provided, the amount, applicable GST or a declaration that GST does not apply, and the payment due date. For GST-registered freelancers, it is called a Tax Invoice and must follow the mandatory format under Rule 46 of the CGST Rules.
Does a freelancer in India need to charge GST?
A freelancer must register for GST and charge 18% GST if their annual turnover exceeds ₹20 lakh (₹10 lakh in special category states like those in Northeast India). Freelancers below this threshold do not need to register or charge GST. However, if you provide services to clients outside India (export of services), you must register for GST regardless of your turnover.
What is the format of a freelancer invoice in India?
A GST-registered freelancer must issue a Tax Invoice containing: the words "Tax Invoice", your GSTIN, invoice number, invoice date, client details and GSTIN (for B2B), place of supply, service description, SAC code, taxable value, GST rate, tax amount (CGST + SGST or IGST), and total amount. A non-GST freelancer must issue a plain Invoice containing their name, PAN, service description, amount, and a declaration that GST is not applicable.
What is TDS on a freelancer invoice?
TDS (Tax Deducted at Source) under Section 194J is deducted by Indian companies when they pay more than ₹30,000 in a financial year to a freelancer for professional services. The TDS rate is 10%. The client deducts 10% from your invoice amount, pays the rest to you, and deposits the TDS with the income tax department against your PAN. You claim it as a tax credit when filing your ITR. Foreign clients do not deduct TDS.
Should a freelancer charge GST to a foreign client?
No — if your service qualifies as an export of services (payment received in convertible foreign exchange, service consumed outside India, etc.), you should charge 0% GST under the LUT (Letter of Undertaking) route. Charging 18% GST to a foreign client is incorrect. File an LUT on the GST portal before the financial year to enable zero-rated invoicing.
What is the SAC code on a freelancer invoice?
SAC stands for Service Accounting Code. It is a 6-digit code that classifies the type of service on a GST invoice, similar to HSN codes for goods. For a web developer, it is typically 998314; for a designer, 998392; for a content writer, 998411; for a business consultant, 998311. The SAC code is mandatory on every Tax Invoice under Rule 46 of the CGST Rules.
What happens if a freelancer invoice has no due date?
An invoice without a due date gives the client no clear deadline to pay. It is harder to charge late fees or follow up legally without one. Always write the actual calendar due date ("Payment due by 20th June 2026") rather than leaving it blank or writing only "Net 30". For MSME-registered freelancers, the law mandates payment within 45 days of the invoice date even if no due date is written.
Related terms
Tax Invoice · GST · SAC Code · GSTIN · TDS · FIRC · Due Date · Payment Terms · LUT · Place of Supply