Agency vs Freelancer in India: GST Status Determines True Cost Premium
A development agency founder in India has highlighted a widely overlooked cost factor in the freelancer-versus-agency debate: the buyer's own GST registration status. Since most Indian freelancers bill without GST (being under the ₹20 lakh threshold) while agencies charge 18% GST, the real price gap depends on whether the client can claim input tax credit. For GST-registered businesses, the agency premium works out to roughly 20% after reclaiming the tax; for unregistered buyers such as individual founders or small trusts, the same agency quote becomes about 42% more expensive. The article also flags TDS compliance under Section 194J as a common friction point, noting that freelancers unfamiliar with the rule often misread a correctly withheld 10% deduction as underpayment. The author recommends clients ask vendors upfront, in writing, about GST registration and TDS accounting to avoid the two most frequent payment disputes in Indian software projects.
This is an AI-generated summary. ShortSingh links to the original source for the complete article.

Discussion (0)
Log in to join the discussion and vote.
Log in