What Income Tax Returns a Freelancer Should File?

Freelancing is a career option for many who want to serve many organizations and want to stay independent both personally and financially. However, it creates complications when an income tax return is the topic of concern. Unlike salaried individuals, freelancers have several income sources, and there returns should reflect that.

What income tax return should I file? What’s the slab for my income tax returns? How to file my income tax returns?  These are the questions that freelancers often face. Income tax return for freelancers is, therefore, a necessary topic and therefore, our experts answer these questions through this blog.

How does the income tax department see the freelancers?

As a freelancer, your income comes from your manual and intellectual skill. From the context of the income tax department, your income comes under the Profit & Gains of Business and Profession. Therefore, you are an entrepreneur that runs a flexible business organization with no form, but only a name: your name. The businesses you work for are your customers and the income earned from different clients has to be reflected in your income tax returns. The Income tax returns for freelancers in India is quite flexible. Therefore, there is no need to panic when paying your taxes.

What is TDS?

TDS refers to Tax deducted at source. It’s the tax that your sources pay when they take services from you. Therefore, whatever you earn from these organizations, 10% of it is deducted as TDS. It comes under Section 194J of the Income Tax Act. Now, one advantage of filing an Income tax return that you have as a freelancer is that you can claim a TDS refund.

How to reduce the taxes you pay?

Under certain circumstances and certain sections, there is a way for you to reduce the taxes you pay. They all come under deductions. If you’ve had additional expenses, you can add them to the deductions and reduce the amount of tax that you are paying. These expenses are:

1. Rent
2. Repairs
3. Depreciation
4. Office expenses
5. Meals
6. Entertainment
7. Hospitality
8. Traveling expenses

How to file an Income Tax return as a freelancer?

As a freelancer, the income tax return filing in India online is done through the ITR-4 form. Before we tell you how to file the ITR form, take care of the requirements given below:

1. Invoices of each freelance project that you got paid for.
2. Your Bank statements.
3. A report of how much income tax was paid.
4. Your PAN card
5. Your AADHAR Card.

Once you have these, you can follow the steps given below to file ITR-4: the Income-tax return form you need to file as a freelancer.

The process to file an ITR is as follows:

1. Go to the income tax return filing website.
2. Log in the website.
3. Click on the Filing Returns option.
4. Choose the assessment year, the filing type, the submission mode, and the ITR form number
5. Fill personal details in Sheet 1.
6. Fill income details and deductions in sheet 2. The tax will be auto-calculated.
7. Fill the bank details in sheet 3.
8. Declare that everything you have filed is correct in sheet 4.
9. Submit the ITR form through e-verification.

Check out our complete guide for Income tax Return Filing

Once you have filed the return, you will be notified once it’s processed. Now, despite the process being online, it can still be complicated. Therefore, it will suit you better if you contact our Income tax experts for your return filing needs.

Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.