The agency premium in India is 20% or 42% - and it depends on your GST registration, not their price

Short summary

In India, the real cost premium of hiring an agency over a freelancer depends on your GST registration status, not the sticker price. GST-registered businesses reclaim the 18% GST agencies charge, making the real premium about 20%. Unregistered businesses cannot reclaim it, pushing the effective premium to 42%. The article also covers TDS obligations under Section 194J and provides rate benchmarks for freelancers vs agencies across project types.

• •Agency premium is 20% for GST-registered businesses but 42% for unregistered ones due to non-reclaimable GST
• •Freelancers under ₹20L turnover often bill without GST, creating a hidden cost asymmetry
• •Always ask vendors about GST registration and TDS under Section 194J before first payment

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