Freelancer’s Guide to Filing Income Tax Returns in India
Freelancing in India has witnessed significant growth in recent years. With increased access to digital platforms and remote opportunities, many professionals have started freelancing as a full-time or part-time source of income. Whether you are a graphic designer, web developer, tutor, or consultant, it is important to understand your tax obligations when it comes to freelancing.
Filing your income tax return (ITR) is not just a legal requirement but also a responsible financial practice. This guide will help you understand how to file income tax returns for freelancers, applicable tax rates, benefits, and the process involved.
What is ‘Freelancing’ According to Income Tax Laws?
Under the Income Tax Act, any income you earn by providing services on your own, without being under a contract of service, falls under “Profits and Gains from Business or Profession”. This classification applies whether you:
- Create written content or copy
- Design websites, apps or graphics
- Offer photography or videography
- Provide tuition or coaching
- Render consultancy (legal, financial, marketing, etc.)
- Supply design, animation or multimedia services
The government treats your freelance earnings much like a small business. Consequently, you are expected to maintain records, account for receipts and report expenses under the business-income head.
Tax Applicability and Filing ITR For Freelancers
As a freelancer, you choose between two regimes:
- Old Tax Regime: Standard slabs + deductions/exemptions
- New Tax Regime: Lower slabs but reduced deductions
You must file an ITR if your total income exceeds your basic exemption limit (₹2.5 lakh for those under 60 under the old tax regime). Voluntary filing can also help in claiming refunds and establishing financial credibility.
Updated New Tax Regime Slabs (Effective FY 2025-26 / AY 2026-27)
Total Annual Income | Income Tax Rate |
|---|---|
Up to ₹4,00,00 | NIL |
₹4,00,001 to ₹8,00,000 | 5% |
₹8,00,000 to ₹12,00,000 | 10% |
₹12,00,001 – ₹16,00,000 | 15% |
₹16,00,001 – ₹20,00,000 | 20% |
₹20,00,001 – ₹24,00,000 | 25% |
Above ₹24,00,001 | 30% |
Under this new regime, your income up to ₹12 lakh is entirely tax-free (after standard deduction and rebate).
Section 87A Rebate
Freelancers with taxable income up to ₹12 lakh can claim a full rebate of up to ₹60,000 under Section 87A, meaning even if you fall in the 15% bracket on part of your income, you will effectively pay no tax until your net tax exceeds ₹ 60,000.
Old Tax Regime Slabs (under 60 years)
Total Annual Income | Income Tax Rate |
|---|---|
Up to ₹ 2,50,000 | Nil |
₹ 2,50,001 – ₹ 5,00,000 | 5% |
₹ 5,00,001 – ₹ 10,00,000 | 20% |
Above ₹ 10,00,000 | 30% |
GST Registration for Freelancers
If your gross receipts exceed ₹20 lakh (₹10 lakh in North-Eastern/hill states) in a financial year, you must register under GST. The standard rate for most services is 18%, though certain service categories attract a lower or zero rate.
How Do Freelancers File for Income Tax?
Filing your income tax return in India as a freelancer involves the following:
- Choose the Correct ITR Form
- ITR-4 (Sugam): If you opt for Section 44ADA presumptive taxation
- ITR-3: If you maintain full books and report actual profits
- Gather Essential Documents
- PAN and Aadhaar
- Form 26AS / AIS (TDS and advance-tax credits)
- Form 16A (for TDS on professional fees)
- Bank statements and UPI records
- Invoices and agreements
- GST returns (if registered)
- Investment proofs (for claiming deductions)
- Compute Gross Receipts
Sum all domestic and foreign payments. Convert foreign earnings to rupees using the RBI reference rate on the date of receipt. - Claim Business Expenses
Deduct legitimate costs such as internet bills, software subscriptions, office rent, travel for meetings, and depreciation on equipment, unless under presumptive taxation. - Consider Presumptive Taxation (Section 44ADA)
Some professionals, if youtheir annual receipts are ≤ ₹75 lakh provided that at least 95% of receipts are through prescribed banking channels, can declare 50% of gross receipts as taxable income, foregoing separate expense claims. - Decide on Tax Regime
Compare the New Regime (lower slabs, no deductions except standard) with the Old Regime (higher slabs, but full access to exemptions and deductions). Choose whichever yields lower tax. - Pay Advance Tax (if applicable)
- If your net tax liability (post-TDS) is > ₹ 10,000, you must pay instalments via Challan 280:
- 15 June: 15%
- 15 September: 45%
- 15 December: 75%
- 15 March: 100%
- Presumptive taxpayers pay 100% by 15 March.
- If your net tax liability (post-TDS) is > ₹ 10,000, you must pay instalments via Challan 280:
- File on the e-Filing Portal
- Login to the portal: incometax.gov.in.
- Select ITR-3 or ITR-4.
- Enter personal, income, TDS, and deduction details.
- Upload supporting documents if prompted.
Under the New Regime, you can claim a standard deduction of ₹ 75,000.
- E-Verify Your Return
Complete verification via Aadhaar OTP, net banking or DSC within 30 days. Returns not verified are treated as invalid. - Track Refunds and Status
Monitor your Refund Status on the portal or via Form 26AS. Note interest under Sections 234A/B/C if you miss deadlines or underpay tax.
Additional Read: Updated Income Tax Slabs & Rates for FY 2025-26
Some of the Relevant Exemptions and Deductions
Under the Old Tax Regime, you can reduce your taxable income via:
Section | Purpose | Limit |
|---|---|---|
80C | PPF, ELSS, LIC, tax-saving FDs, principal on home loan | Up to ₹1.5 lakh |
80CCD(1B) | National Pension Scheme (NPS) top-up | Up to ₹50,000 |
80D | Health insurance premiums | Up to ₹25,000 (₹50,000 for seniors) |
80E | Interest on education loan | No upper limit |
80G | Donations to registered charitable trusts | 50–100% of donation |
80TTA | Interest on savings account | Up to ₹ 10,000 |
Business-related costs such as co-working space rent, software licences, travel for client meetings, and equipment depreciation can also be claimed under “Profits and Gains of Business or Profession”.
TDS for Freelancers
Your clients may deduct Tax Deducted at Source before crediting your fee:
Section | Nature of Payment | TDS Rate |
|---|---|---|
194J | Professional/technical services | 10% |
194H | Commission or brokerage | 5% |
194C | Contractual services | 1% (individuals), 2% (others) |
Ensure Form 16A (TDS certificate) aligns with Form 26AS. If your total income is below the taxable threshold, furnish Form 15G/15H to avoid TDS deduction.
Thought of Advance Taxes for Freelancers
If your computed annual tax exceeds ₹ 10,000 after accounting for TDS, you must pay advance tax in instalments:
Due Date | Cumulative Liability (%) |
|---|---|
15 June | 15% |
15 September | 45% |
15 December | 75% |
15 March | 100% |
Use Challan 280 on the Income Tax Portal. Late or short payments lead to interest charges under Sections 234B and 234C.
Conclusion
Filing your income tax return in India as a freelancer is not optional. It is a legal duty and also beneficial when applying for loans, visas, or any official documentation. Although the process may seem complicated at first, with a little organisation and awareness of the applicable tax laws, you can ensure timely and accurate tax filing.
Use deductions and schemes smartly, maintain transparency, and avoid penalties. Whether you are a seasoned freelancer or just starting out, understanding how to file income tax returns properly can help you manage your financial responsibilities better and build a credible profile.
Additional Read: How to Save Tax in India?
Additional Read: Tax Filing Rules in India 2025: Forms, Deadlines & Penalties
More Related Articles
What Makes Filing Tax Returns Important?
26 September 2025 | 5 mins read
Filing income tax returns (ITR) may seem like a routine annual task, but its significance goes far beyond legal compliance. Whether you're a salaried employee, business owner, freelancer, or investor, understanding the importance of income tax filing is essential for long-term financial wellbeing and legal transparency.
Why Paying Your Taxes Matters for the Country and You
24 September 2025 | 6 mins read
Every year, millions of Indians contribute to the nation’s growth not only through their work and businesses but also by fulfilling the crucial civic responsibility of paying their taxes. Whether you are a salaried individual, self-employed professional, or run a business, you are liable to pay government taxes if your income exceeds the prescribed threshold.
Section-Based Income Tax Saving Strategies for Salaried Individuals
22 September 2025 | 6 mins read
Income tax planning is an important aspect of financial management for every salaried individual. As your income grows, so does your responsibility to file accurate returns and manage your tax liabilities wisely.
FAQ
Which ITR form should you use as a freelancer?
If you choose Section 44ADA presumptive taxation (gross receipts ≤ ₹75 lakh with ≤ 5% in cash), file ITR-4 (Sugam), declaring 50% of receipts as income. If you maintain full books and want to claim actual expenses, use ITR-3.
When is GST registration mandatory?
Register for GST only if your total annual freelancing turnover exceeds ₹20 lakh (or ₹10 lakh in North-Eastern/hill states). Below this threshold, you may opt out of GST, though voluntary registration allows you to claim input tax credits.
Can you claim expenses under Section 44ADA?
No. The presumptive scheme under Section 44ADA requires you to treat 50% of gross receipts as taxable income, covering all business expenses. If your actual costs exceed 50%, file under ITR-3 to itemise expenses.
What is the cash-limit condition for Section 44ADA?
The ₹75 lakh threshold applies only when ≤ 5% of receipts are in cash; the remainder must be via banking channels (UPI, cheque, etc.). If cash receipts exceed 5%, the limit reverts to ₹50 lakh.
How does the new-regime standard deduction work?
Under the New Tax Regime, you may claim a standard deduction of ₹75,000 before applying new slabs. No other deductions (e.g., 80C, 80D) are available. Compare tax liability under both regimes to choose the lower.
What is the Section 87A rebate?
If your net taxable income is up to ₹12 lakh, you can claim a rebate of up to ₹60,000 under Section 87A. This effectively reduces your tax liability to zero, provided your computed tax does not exceed ₹60,000.
When and how must you pay advance tax?
If your net tax liability (after TDS) exceeds ₹10,000, pay advance tax via Challan 280 in instalments:
- 15 June: 15%
- 15 September: 45%
- 15 December: 75%
15 March: 100%
Presumptive taxpayers must pay 100% by 15 March. Late payments attract interest under Sections 234B/C.
Are foreign freelance earnings taxable?
Yes. As a resident Indian, you must include global income, converting foreign receipts to rupees at the RBI rate on the date of receipt. Declare this in your ITR under “Profits and Gains from Business or Profession”.
What happens if you miss the ITR deadline?
Filing after 31 July (or extended date) incurs:
- Late fee up to ₹5,000 (₹ 1,000 if income ≤ ₹5 lakh)
- Interest under Sections 234A, 234B, 234C
- Loss of carry-forward of certain losses
Belated returns can be filed by 31 December, subject to fees.
Can you file ITR without a consultant?
Yes. The Income Tax e-Filing Portal offers guided form selection and submission. However, if you have multiple streams, sizable turnover, or foreign income, professional advice can prevent errors and optimise deductions.