Freelancer – when is your service considered an Export?

Many of our customers who are Freelancers write to us to know whether service tax is applicable to them. Service tax is not applicable when services are exported. Can a freelancer’s services be considered as an ‘export of services’?

{Please note that all your income from these services or sources will be taxable, and in this post we will discuss only service tax applicability}.

As a rule – Service tax is applicable and calculated on your Revenue and not Income. Revenue is the receipts from customers, while Income is Revenue Less Expenses. If your Revenue is more than Rs 10lakhs in a year, service tax has to be paid on your revenue. However, when you cross Rs 9lakhs you must get yourself a service tax registration.

Projects on Odesk, Elance – Many of freelancers do software development and similar projects for clients which are based out of India. Usually work such as this is considered as a service which has been provided out of India. Services provided outside of India or services which are exported are exempt from service tax – therefore these receipts shall not be considered while testing whether the total amount of services provided by you is more than Rs 10lakhs.

Affiliate Income – As a freelancer or a blogger a substantial part of your income may be generated from affiliate programs. When you act as an affiliate you earn a commission for referring customers to a website. Service tax shall be applicable on these sales. However, no service tax is applicable if your total sales are less than Rs 10lakhs.

Adsense or Advertisement Income – Some of the freelancers especially bloggers earn income from the ads they allow on their blog. In the budget of 2014, it was announced that online advertising will be covered under Service Tax net. This means is that if you are earning any revenue from advertisements, service tax will apply on those – of course unless you touch Rs 10lakhs in revenue, you don’t need to pay any service tax.


In case you have questions about applicability of service tax to a specific service provided by you Reach out to us or write to us


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