Who is liable to pay GST? (Who pays GST) After all, who has to pay GST, the buyer or the seller? This question is very common. In this article, I am going to tell you who has to pay GST. Before that, let me tell you in short, what is GST? Without wasting time, let’s move ahead. also read GST new update
What is GST?
GST means “Goods and Services” Tax. Whenever you buy any goods or service, then GST tax is levied. Before the introduction of GST, whenever you used to buy any goods or services, VAT, service tax and many other taxes were levied. The government brought them all together and replaced them with GST. Hope you have understood what GST is.
Who pays GST and why is it important to know this?
If you run or own any business, or sell services or goods, then you should know whether you have to pay GST or not, and when to pay it and how to pay it.
If your income or turnover is more than the limit imposed by the government, then GST registration is necessary.
Simple: It is important to understand the responsibilities of GST so that you work as per the law and avoid unnecessary hassles. also read what is debt management?
Who is liable to pay GST or who pays GST?
You have to pay GST to the government when you sell any service or product. This is when you have to pay GST. The question arises: who pays GST, the consumer or the seller?
Who pays GST?
The main point is that if you run a shop, sell online products or services (e.g., websites, giving tuition, etc.), and your income or turnover (if you are a business owner) is more than the government limit, then in this situation you have to get GST registration done and pay monthly GST, not the consumer.
However, in some special cases, the consumer must pay GST. These cases are called reversal charges. For example, if you access any online services from other countries, or if you purchase something from someone without GST registration, a reversal charge applies.
The government has set an income limit.
- 40 lakh for those selling goods
- 20 lakh for those selling services
- Some small states have 10 lakh
If your income exceeds the government limit, then you are liable to pay GST; you will also have to pay GST
GST Liability Based on Category
I mainly divide GST liability into 3 parts
Individuals
“Individual” means that you do not have any shop of your own, nor any company, you just work alone, then in this situation you may have to pay GST, but there are some rules for it, we will talk about them later.
Who comes under the category of individual?
- Freelancers (website development, graphic design, content writing, etc.)
- Tutors, coaching instructors, or those selling online courses
- Social media influencers (YouTube, Instagram, etc.)
- Online service providers (digital marketing, SEO, editing, etc.)
- Doctors, Chartered Accountants (if working independently)
when have to pay GST?
Method of work | annual income | Is it necessary to pay GST? |
Providing services (such as freelancing) | More than ₹20 lakh | Yes |
Selling goods (such as selling something from home) | More than ₹40 lakh | Yes |
In some states (like the North-East) | More than ₹10 lakh | Yes |
If your income is less than the table I have prepared, then in this situation you will not have to pay GST, but if you wish, you can get GST registration done.
Reverse change
In some special cases you have to pay GST fee then you are purchasing app service
- If you use the app for services in other countries, such as buying CANVA Pro or buying ZOOM
- Or you take services from someone who has not got GST registration done.
In the situations in which I have written some cases above, you have to do the GST yourself.
Businesses
If you run any shop, company, firm, or online business, you should have a thorough understanding of patrolling, as business is somewhat complex.
Who falls in this category
- Grocery store, clothing store, mobile shop
- Private Limited Company, Partnership Firm
- Online sellers (Amazon, Flipkart, Meesho ones)
When is it necessary to pay GST?
Business Methodology | annual turnover | Is GST registration necessary? | ||
Selling Goods | More than ₹40 lakh | Yes | ||
Providing Services | More than ₹20 lakh | Yes | ||
In some states (like the North-East) | More than ₹10 lakh | Yes | ||
Sell on e-commerce |
| yes |
If you are liable to pay GST as per this list, then first of all you will have to get GST registration done. After GST registration, you will have to pay GST to the government every month. You will have to keep a record of every small sales invoice bill and pay GST to the government.
If GST is not paid to the government even after becoming liable, this situation could result in a penalty, notice, or return blockage. If it’s an e-commerce business, its account could be suspended, and the government could lose trust in the business.
Freelancers
If you work online from your home or anywhere else, for example, web development, digital marketing, freelancing, editing, graphics designing, blogging, and investing, etc., then you fall under the category of freelancer.
They don’t work for any company but rather take the work directly from the client and deduct the work charges directly into their bank accounts. Now the question arises: who is liable to pay GST? (Will you have to pay GST?)
When is it necessary to pay GST?
Method of work | annual income | Is it necessary to pay GST? |
Providing services (such as website development, editing) | More than ₹20 lakh | Yes |
In some states (like the North-East) | More than ₹10 lakh | Yes |
Client from abroad | any income | Yes (No Reverse Charge, considered as Export) |
Who Pays GST: Buyer or Seller?
The seller is responsible for paying GST, but the seller collects this tax from the buyer. Indirectly, the buyer will pay the tax, but the seller is responsible for remitting it to the government.
Business to business
In B2B, when one business supplies goods, products, raw materials, or services to another business, the buyer receives a GST invoice and claims Input Tax Credit (ITC). The seller collects GST from the buyer and pays it to the government.
For example, a wholesaler sells phones to a mobile shop, the buyer receives an invoice from the shop and claims ITC it.
Business to consumer
When a shop, firm, or company sells goods or services directly to a consumer, the buyer pays GST to the shop, or the seller, but they do not receive any ITC. The consumer pays the GST to the seller, who then pays it to the government.
FAQs
Does every freelancer need to pay GST?
No. If your annual income is less than ₹20 lakh (₹10 lakh in some states), you don’t have to pay GST. However, if it’s more than that, you’ll need to obtain GST registration and pay the tax.
Can I avoid GST if income is below threshold?
Yes. If your income is below the government’s established limit, you are not required to pay GST. You can register voluntarily, but it’s not mandatory.
Who pays GST under reverse charge?
In a reverse charge, the buyer pays GST, not the seller. For example:
You purchase an online service from abroad (Zoom, Canva) You purchase a service from someone without GST registrationIn these cases, you have to pay the GST to the government yourself.
Do YouTubers and influencers need GST?
If your annual income exceeds ₹20 lakh, then yes—GST will be payable. The money YouTubers receive from AdSense is also considered service income. The money influencers receive from brands (sponsorships, promotions) is also subject to GST.
Conclusion
GST is the responsibility of the person or business that sells goods or provides services—the supplier. If your annual income exceeds the government-defined limits (₹20L/₹40L/₹10L), you must obtain GST registration and pay the tax.
What should be done in which category?
Category | When is it necessary to pay GST? | Advice | ||
| Earning more than ₹20 lakh | If your income is increasing then get registered. | ||
| Turnover above ₹40 lakh | GST registration and returns are mandatory. | ||
Freelancer | Service income above ₹20 lakh | Register even if you are working from abroad. | ||
| Any turnover | Registration is mandatory | ||
| Brand income above ₹20 lakh | Sponsorship is subject to GST. |