Did you know that India has the second fastest-growing freelance market in the world? Income tax for freelancers in India has become quite beneficial, making the profession more lucrative. However, despite the freedom freelancers experience in their jobs, like everyone who earns an income, they too have to pay taxes.

When you pay taxes as a freelancer, you also need to file income tax returns as per the IT Act. The process of filing the ITR for freelancers might get confusing as it is slightly different from that of salaried individuals.

1. ITR for freelancers is a fairly easy process.The only c
2. omplication that can arise is because of the potentially multiple sources of income that freelancers can have.
3. Freelancers must be aware of the tax slab they are filing their income tax under to file for their return successfully.

From a taxation point of view, freelancing is seen as a business or profession. With this in mind,  as per income tax laws in India, any “gains and profits from business or profession” an individual earns using either manual or intellectual skill is taxable.

From software developers, content writers, and web designers to tutors and fashion designers, all come under the banner of freelancers. The main complication of income tax filing for freelancers arises from the fact that they might have multiple sources of income.

Like salaried individuals, freelancers pay income tax according to the applicable tax slab. This can depend on whether freelancers have chosen the new tax regime or the old tax regime. Freelancers must research their tax slabs to better understand the income tax that they owe.

• The tax deductions that freelancers want to claim are dependent on the tax regime they opt for.
• With the help of the Presumptive Taxation Scheme under Section 44ADA of the Income Tax Act, 1961, freelancers can pay tax on only half of their gross annual income.
• However, this provision will only be available to freelancers whose total annual income is less than Rs. 50 lakhs.
• A tax audit for business income is usually done for freelancers with gross annual income over Rs. 1 crore.
• 10% TDS is applicable every time freelancers make a payment of more than Rs. 30,000 to professionals.
• Freelancers can file income tax returns on this payment using the ITR-4 form under the Presumptive Taxation Scheme.
• If freelancers are not using the benefits of the Presumptive Taxation Scheme, they can file returns via the ITR-3 form.

Listed below are the steps to file ITR for freelancers in India:

Step 1: Fill out the right ITR form

• ITR-3 is for Hindu Undivided Families (HUFs) and individuals who have an income from a profession or proprietary business.
• ITR-4 is for individuals, firms except LLPs and HUFs who have opted for the Presumptive Income Scheme under Section 44ADA.

Step 2: Have the required documents handy

It is important to have the following documents handy when filing your taxes:

• Bank statements
• Form 16A
• Accounts book
• Invoices
• Proof of investment
• GST returns

Step 3: Total income calculation

• It is important to calculate your total income to know your tax sab before filing your taxes.

Step 4: Use the Presumptive Taxation Scheme (if applicable)

• If your total receipts are up to Rs. 50 lakh or less, you can opt for the presumptive taxation scheme under Section 44ADA.

Step 4: Register on the income tax e-filing portal

• Once all the steps above are in place, you need to register on the official portal.

Step 5: Login and select the ITR form

• After registration, log in to the website and select the correct ITR form.

Step 6: Upload the filled form

• Once you have filled out the form, upload it onto the website.

Step 7: Verify your ITR

• After all the processes above, finally verify your ITR.

The ITR process is fairly simple for freelancers, too, even though it is slightly different from salaried individuals. This is why it is important to follow the instructions given above step by step to ensure that the ITR filing process is smooth and without glitches. If you are looking for safe investment option, then you can consider investing Bajaj Finance Fixed Deposit. With a top-tier AAA rating from financial agencies like CRISIL and ICRA, they offer one of the highest returns, up to 8.60% p.a.