*(Disclaimer: This is practical business guidance, not formal financial advice. Always consult a certified Chartered Accountant for your specific situation.)*
When you transition from a salaried employee to an independent consultant, the Indian tax code suddenly feels like a minefield. It isn't. You just need to understand three core concepts: GST, TDS, and Presumptive Taxation.
1. GST: When Do You Need It? You are required by law to register for Goods and Services Tax (GST) if your aggregate turnover in a financial year exceeds ₹20 Lakhs.
However, many mid-market and enterprise clients will refuse to work with you *unless* you have a GST number, even if you are below the ₹20L threshold. They need it to claim input tax credit.
The Rule: Get your GST registration on Day 1. It signals you are a professional business, not a freelancer doing a side-gig. For consulting services, the standard GST rate is 18%. Always quote your fees as "Base + 18% GST." If you quote a flat ₹1,00,000, the client will assume it is inclusive, and you just took an 18% pay cut.
2. TDS: Section 194J When an Indian company pays you for professional services, they will deduct Tax Deducted at Source (TDS) before paying your invoice. Under Section 194J, this is typically 10%.
If you invoice ₹1,00,000 (plus ₹18,000 GST), the client will deduct ₹10,000 as TDS. You will receive ₹1,08,000 in your bank account.
Do not panic. This is not lost money. The client deposits that ₹10,000 against your PAN. When you file your annual income tax returns, this TDS acts as advance tax paid.
3. Presumptive Taxation (Section 44ADA) This is the greatest gift the Indian government has given independent consultants. If your total receipts for the year are under ₹75 Lakhs, Section 44ADA allows you to declare 50% of your gross receipts as taxable income. No need to maintain complex books of accounts or track every single coffee receipt.
The Easy Way Out Managing compliance is exhausting when you should be focusing on client delivery. When you [join as a consultant](/join-as-consultant) on the Preconsultify platform, you don't have to chase clients for TDS certificates or argue over GST inclusion. We manage [how it works](/how-it-works) so you can focus purely on the work.
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