ITR filing for freelancers: Key tax tips to simplify the process

As tax season approaches, India's growing freelance community are navigating a maze of rules and forms. Filing income tax returns (ITR) as a freelancer comes with its own challenges and opportunities. Experts from tax and legal firms break down what every freelancer must know.
Choose the right tax regime and form
'Freelancers are taxed just like salaried individuals under the applicable income tax slabs,' said Tarun Garg, Director at Deloitte India. He advised freelancers to compare both the old and new tax regimes each year. 'If opting out of the new regime, it is mandatory to file Form 10-IEA before the ITR,' he added.
On selecting the correct ITR form, Garg explained, 'Freelancers should use ITR-4 if they're under the presumptive taxation scheme [Section 44ADA], and ITR-3 if they have complex income profiles like multiple house properties or capital gains.'
Ritika Nayyar, Partner at Singhania & Co., echoed this, adding, 'Incorrect form selection is one of the most common mistakes freelancers make.'
'Income from freelance work must be reported under the 'Profits and Gains from Business or Profession' head,' said Garg. He recommended tracking TDS via Form 26AS and collecting Form 16A from clients. Freelancers must also pay advance tax if total liability exceeds ~10,000.
Nayyar emphasised the importance of maintaining clean financial records. 'One must keep separate accounts for business and personal expenses and track all sources of income accurately,' he said.
Eligible deductions freelancers can claim
Freelancers can reduce taxable income by claiming a range of business-related expenses. 'These include rent, electricity, mobile and internet bills, software subscriptions, and even depreciation on laptops and cameras,' said Garg.
Nayyar added, 'Proportionate expenses like home office utilities, legal fees, and business travel can be claimed if not using the presumptive scheme. Chapter VIA deductions -- like Sections 80C, 80D, and 80G-- are available in both regimes.'
Should you opt for Section 44ADA?
Section 44ADA offers a simpler route to tax compliance for many freelancers.
'Eligible professionals can declare 50 per cent or more of their gross receipts as taxable income,' said Kunal Savani, Partner at Cyril Amarchand Mangaldas.
'They are not required to maintain books or get audited, provided receipts stay within ~50 lakh or ~75 lakh, under certain conditions.'
Nayyar added, 'It simplifies compliance and exempts eligible professionals from detailed bookkeeping. However, one cannot claim individual business expenses if using this scheme.'
Avoid these common pitfalls
Experts caution against frequent errors.
'Freelancers often fail to pay advance tax or maintain adequate records,' said Garg. 'This can lead to penalties under Sections 234B and 234C, or missed deductions.'
'Timely filing, correct form selection, and accurate reporting are crucial,' said Nayyar. 'Don't treat it as an afterthought, your ITR is your financial identity.'

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