hamburger
×
Digit General Insurance Logo
Powered By Digit
mobile-img

Check Credit Score for FREE

Instant in 2 Mins. No Impact on Credit Score

desktop-img

How to File ITR for Freelancer/Freelancing Income in India?

How to File ITR for Freelancers?

What are the Due Dates for Filing ITR for FY 2022-23 (AY 2023-24)?

The important dates for filing income tax for the Financial Year 2022-23 and Assessment Year 2023-24 is as follows. Failing to file the ITR or missing the deadline will attract certain penalties and even imprisonment.

Category of Taxpayer

Due Date for Tax Filing - FY 2022-23

Individual/Hindu Undivided Family/AOP/BOI (no auditing required

31st July 2023

Businesses that require auditing

31st October 2023

Businesses that require Transfer Pricing Report

30th November 2023

Revised ITR

31st December 2023

Belated/late ITR

31st December 2023

There has been no extension to these dates as of April 20, 2023.

[Source]

When and How Can Freelancers Pay Advance Tax?

If a freelancer’s total tax liability is above ₹10,000, then they are liable to pay the advance tax in each quarter of the financial year by following simple steps:

 

  • Step 1: Visit the Tax Information Network of the Income Tax Department and navigate to the tab of Challan 280.
  • Step 2: Select “0021” income tax other than companies, assessment year, type of tax payment, address, PAN and contact details, payment mode. Proceed with the payment and collect the tax receipt. This receipt is an important document for filing income tax returns.

 

Note that there are different forms to help file returns of income tax for freelancers in India. 

Here are the due dates to pay advance tax for FY 2023-24, as prescribed by the Income Tax Department. If you fail to pay your advance tax on or before the dates, you will have to pay additional interest as penalty under Section 234B and Section 234C.

Due Date or Advance Tax Filing FY 2023-24 Nature of compliance Tax paid
15th June 2023 First instalment 15% of tax liability
15th September 2023 Second instalment 45% of tax liability
15th December 2023 Third Instalment 75% of tax liability
15th March 2024 Fourth instalment 100% of tax liability
15th March 2024 Presumptive scheme 100% of tax liability

How Much Tax is Applied on Indian Freelancers?

Section Tax Levied Details
Section 194J 10% TDS Every professional service of a freelancer is subject to TDS.
Section 44ADA Income shall declare at least 50% of the overall Gross Receipt. And accordingly tax to be paid. Levied when Gross Receipts are lower than ₹50 Lakhs. The income tax is then computed on the presumptive basis.
Section 44AB The difference between Gross Receipts and business expenses is taxed. Levied when Gross Receipts of a freelancer exceed ₹50 lakhs or if the Net Profit is lower than half of the Gross Receipts. In this case, they can keep a Book of Accounts.

[Source]

Previously, the freelancers were liable to pay VAT and Service Tax. However, the changed tax policy now applies 18% GST. Henceforth, freelancers are liable to pay CGST, SGST, and IGST based on service areas.

Income Tax for Freelancers in India (below 60 years old)

Depending on the income tax regime chosen for the stipulated financial year, freelancers’ income is subject to the following income tax slab rates.

New Income Tax Regime for FY 2023-24 (AY 2024-25)

Income tax slabs Rate of Taxation
Up to ₹3,00,000 Nil
Between ₹3,00,001 and ₹6,00,000 5% of your total income that exceeds ₹3,00,000
Between ₹6,00,001 and ₹9,00,000 ₹15,000 + 10% of your total income that exceeds ₹6,00,000
Between ₹9,00,001 and ₹12,00,000 ₹45,000 + 15% of your total income that exceed ₹9,00,000
Between ₹12,00,001 and ₹15,00,000 ₹90,000 + 20% of your total income that exceeds ₹12,00,000
More Than ₹15,00,000 ₹1,50,000 + 30% of your total income that exceeds ₹15,00,000

New Income Tax Regime for FY 2022-23 (AY 2023-24)

Income Tax Slabs Rate of Taxation
Up to ₹2,50,000 Nil
Between ₹2,50,000 and ₹5,00,000 5% of your total income that exceeds ₹3,00,000
Between ₹5,00,000 and ₹7,00,000 ₹12,500 + 10% of your total income that exceeds ₹5,00,000
Between ₹7,50,000 and ₹10,00,000 ₹37,500 + 15% of your total income that exceeds ₹7,50,000
Between ₹10,00,000 and ₹12,50,000 ₹75,000 + 20% of your total income that exceeds ₹10,00,000
Between ₹12,50,000 and ₹15,00,000 ₹1,25,000 + 25% of your total income that exceeds ₹12,50,000
Above ₹15,00,000 ₹1,87,500 + 30% of your total income that exceeds ₹15,00,000

Old Income Tax Regime for FY 2022-23 and FY 2023-24

Income tax slabs Rate of Taxation
Up to ₹2,50,000 Nil
Between ₹2,50,001 and ₹5,00,000 5% of your total income that exceeds ₹2,50,000
Between ₹5,00,001 and ₹10,00,000 ₹12,500 + 20% of your total income that exceeds ₹5,00,000
Above ₹10,00,000 ₹1,12,500 + 30% of your total income that exceeds ₹10,00,000

What are the Tax Deductions Available for Freelancers?

Tax Deductions for Freelancers 

Here are the following Sections that allows freelancers to claim tax deductions to lower their tax liability:

Section Tax Deduction/ Exemption
Section 80C Freelancers can claim a maximum tax deduction of ₹1.5 lakhs against their investment in tax-saving schemes such as life insurance policies, provident fund, ELSS and ULIP insurance.
Section 80 CCC Exemption up to ₹1.5 lakhs on investments made in the pension plans.
Section 80 CCD Tax deduction on investments made in government schemes.
Section 80 CCF It provides tax benefits against investment towards government-specified infrastructure bonds, up to a maximum exemption of ₹20,000.
Section 80 D Tax deduction is available against paying premiums for health insurance policy bought for self, spouse or child.
Section 80 DD Eligible freelancers can claim a maximum tax deduction of ₹75,000 against treatment expenses of disabled dependent of an assessee, which may go up to ₹1.25 lakhs.
Section 80 DDB Tax deduction is available towards treatment of certain specified diseases.
Section 80 E Freelancers can claim a tax deduction on interest paid towards an education loan.
Section 80 EE Individuals are exempted from paying taxes on loans for buying a property for residential purposes.
Section 80 G Tax deduction is available against charitable contributions, either partial or full.

[Source1]

[Source2]

[Source3]

Besides, freelancers can enjoy tax benefits on expenses spent for freelancing work in a given financial year, such as repairing expenditures, expenses related to domain registration, etc.

What are the GST Rules for Freelancers?

FAQs about ITR Filing for Freelancers