Income Tax of Freelancers

 Here’s all that you need to know about ‘Income Tax of Freelancers’  before filing your return.

 Who is a Freelancer?

A person who is self-employed and uses his skill (manual/intellectual) for any profession and is not committed to any particular employer for long-term is known as a Freelancer.

What is freelancing income?

The income of the freelancers include all the receipts from the clients who they serve using their skills.

What does the Income Tax of Freelancers include?

Freelancers can deduct their expenses from their income which has been incurred by them. The net taxable income of a freelancer equals gross taxable income less deductions,i.e.,

Net Taxable Income = Gross Taxable Income -Deductions.

Advance Tax payable by Freelancers

If the liability on Income Tax of Freelancer exceeds Rs. 10,000 in a financial year, then the person is required to pay taxes each quarter which is known as ‘Advance Tax’.

The due dates for payment of Advance taxes are given in the table below:

 On or before 15th   September

 Up to 30% of advance tax

 On or before 15th   December

 Up to 60% of advance tax

 On or before 15th March

 Up to 100% of advance tax

Methods of payment of advance taxes

A taxpayer can pay the taxes by either online payment through Income Department’s website or by filling Challan and paying to the bank.

Penalties for non-payment of advance tax

If the advance taxes are not paid on time, Interest under Section 234B and Section 234C is applicable.

Section 234B is applied when the advance taxes are not paid and Section 234C is applied when the advance taxes are not paid on the due dates mentioned above by the Income Tax Department.

Which ITR should freelancers use while filing their Income Tax returns?

The ITR online of Freelancers must be filed through ITR-4.

For any help on ITR Filing feel free to consult the tax experts at Taxraahi. You can file ITR yourself via our ITR software or get CA’s help on filing income tax return. You can also use the option of Business Return, and Bulk Return.now !!

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