GST Guide for Consultants in India
Master consulting fee calculations, understand TDS offsets, and invoice out-of-pocket expenses correctly.
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Consulting Invoice Anatomy: Fee + GST vs. TDS
As a professional consultant, corporate clients will typically deduct TDS (Tax Deducted at Source) at a rate of 10% (under Section 194J) or 7.5% depending on prevailing budget laws. Here is how TDS and GST interact on a typical ₹1,00,000 consulting fee invoice:
Invoice Breakdown Example:
- Base Consulting Fee: ₹1,00,000
- GST (18% added on top): + ₹18,000
- Total Invoice Value: ₹1,18,000
- TDS (10% deducted on Base Fee only): − ₹10,000
- Net Amount Client Pays You: ₹1,08,000 (Your fee of ₹1,00,000 − ₹10,000 TDS + ₹18,000 GST)
*Note: You must still pay the full ₹18,000 GST to the government. The ₹10,000 TDS is not a loss; it is credited to your PAN card and can be claimed back or offset against your income tax liability when you file your Income Tax Return (ITR).
Frequently Asked Questions
What is the difference between GST and TDS for consultants?
GST is an indirect tax that you add to your invoice (usually 18%) and collect from your client to pay to the government. TDS (Tax Deducted at Source) is a direct tax deduction (usually 10% under Section 194J for professional fees) that your client deducts from your fee and pays as advance tax on your behalf. They are calculated separately: GST is added on top of your fee, while TDS is deducted from the base fee.
How should consultants charge for out-of-pocket expenses?
If you incur travel, lodging, or food expenses and bill them back to the client, you can either bill them as a "pure agent" (reimbursing exact expense without GST, if original invoice was in client's name) or include them in your taxable value and levy 18% GST.
Do I need a corporate bank account to collect GST?
While not legally mandatory for sole proprietors (who can register GST on their personal PAN), it is highly recommended to open a current bank account under your trade name to separate business tax flows from personal savings.