Freelancing is a blooming area, and the future of work all around the world. It is a boon for many people who find it difficult to work in an office or like the comfort of home while earning their daily livelihood. Some are able to make very high income but many work for low payments. Earning start as low as $ 0.01 for small micro works which only take a few minutes to complete and goes higher according to the difficulty and skill-set required. Most of these online job sites sent earning weekly or monthly automatically by services like Paypal and Payoneer. A few has the option has the option to wire transfer to your bank account.
Many freelancer can earn only few dollars a day especially those doing micro-jobs due to the of lack of available work. Paypal and Payoneer send money that users get into their bank account daily according to the law stated by the Reserve Bank of India (RBI). India implemented its Goods and Service System (GST) from First of July 2017. The new taxation system was welcomed by people with both hands surprisingly. It brings with it the burden of taxation to the service sector. Services given in India is taxed and services exported is exempted from it. Thus freelancing which comes under service sector is mandated to register for GST if income is above 9 lakhs and has to pay GST at 18% if income is above 20 lakhs. Also all those who do freelancing interstate or for an oversea client has to register for GST.
GST is by law is not charged from the oversea clients for the service to them due to lack of judicatory power. But again to have more control over the freelance industry especially the service industry govt has imposed that money which reaches bank account from abroad irrespective of whether it is from Paypal or Payoneer or wire transfer will be having a GST at 18%. It can be claimed back by submitting GST returns which in itself is a headache as it has to be submitted 3 times a month with possible fines. Also for each withdrawal of money to your account from Paypal and Payoneer require submission to the service provider form Oct 2 a Foreign Inward Remittance Certificate (FIRC) from the bank which is very difficult to get and has a bank charge of Rs 236 each time. Direct wire transfer from those very few online jobs sites which support it also will require FIRC.
Taking this matter in a realistic example let us suppose you earns 6 USD on a micro job sites and that the money is withdrawn to Paypal or Payoneer at the end of the week/month automatically or manually. They will then daily withdraw the same to your bank account daily as per the law. After currency exchange and service provider's charge approximately R 300 will come to the bank account that too only after you manually go to bank and apply for FIRC by paying Rs 236 (Rs 200+GST @18%). Once Rs 300 reaches the account Govt will debit Rs 54 as GST @18% from that amount. You are the left with Rs 10 as your earning for the time being after tallying the FIRC of Rs 236 at bank counter and GST of Rs 54 t {300 - (236 +54)}. One you remit GST returns and they find accordingly that the money was indeed from a abroad client the Income tax department will give back Rs 54 GST which was debited before. So once these procedures are over you will Rs 64 as your real income considering the fact that you had to give the FIRC charge at the bank branch. If you have many transaction per month or assuming the present auto withdrawal of the Paypal and Payoneer of once per day continues you might be dealing with payments of enormous number of FIRC charges with it's own hassle of paper work.
Image having 100 times money coming to your account and paying 100 times FIRC a month ! More than all these consider having to pay the income tax you have to pay for the Rs 300 (you only got Rs 64) which came to your account if you are a tax payer at the end of the year. GST registration can only be canceled after one year once registered. Envisage the scenario where you have to file 37 GST return a year for just receiving a mere Rs 100 in for the whole year from a foreign website and adding to that the nightmare of paying fine of Rs 100 per day for each violation for not filing returns on the three due dates of each month.
Many freelancers are considering and requesting from the job-sites payment in the form of Bitcoin or other prominent crypto-currencies as it means less daily turmoil to deal with. May be the loss of faith and difficulties in the banking system may be an additional reason for the recent surge in the price of most prominent cryptocurrencies.
With propaganda of digital India, make in India and others, what was added to the life for simple people is a life of headache for deciding to work at home because of his or her own reason (author is a freelancer because of semi autism and doesn't want to go for work outside). In a country like India where unemployment is on the increase and where more than 15 million people are working as freelancers (according to pay service Payoneer) Govt has take urgent steps to to help the millions whose life is affected because of haphazard implementation of of good intension to bring GST.
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