GST and its effects on the business of translation

Ever since The Goods and Services Tax has been introduced by the Modi government in July 2017 as a landmark economic reform, quite a few clients sought my GST Identification Number called GSTIN in short. Realizing the importance of bringing myself under GST, I finally had my registration done with the help of a CA. Based on the discussions with some clients, I am presenting my views on how GST will affect the translation business and why it is necessary for a freelance translator in India to get enrolled for the same.

GST is a kind of loop created in such a way that the unregistered party will lose certain amount of profit (based on whatever is the percentage of GST is) in the transaction for which GST applies. One of the clients had register both his companies (local and exports) for same reasons. Although his turnover was less, all the local clients asked him to register. Moreover, several vendors, especially those having private limited companies, will be billing with GST. Hence, this is a kind of loop. Either one has to register in order to get the GST credit or be ready to forego 18% from the profit.

In individual case, GST registration is not mandatory for those having an annual turnover less than 10 lacs as per government's clarification. However, if your clients demand, you will have to register if the clients are not willing to give work to an unregistered GST service provider. In that case an individual will need to get registered for GST and take care of uploading monthly GSTR-3B returns.

If you are providing services to a client out of your state, you must register for IGST as that client has to pay reverse charges on your bills as per current GST laws. If you provide services out of your state for any amount, you must register for GST as per GST laws. Anyone providing their services out of state must register for GST to avoid any future penalties. 

My CA asked me to register first for MSME and then he proceeded to complete GST registration on behalf of me. 

In an another scenario, one client stopped working with foreign clients after the GST registration was made mandatory. That client was of the view that the implementation of GST resulted in unnecessary increase in translation cost. A translation agency needs to maintain their 30% profit margin and therefore cannot hire a translator who is registered under GST or if they wish to hire a GST registered translator they cannot pay more than 80 to 90 paise per word.

It is too early to comment on pros and cons of GST and its effects on the translation industry. Will it bring recession or boom in my business? Only time will tell.