Freelancing gives people the freedom to choose their work, but it also comes with tax responsibilities. Unlike salaried employees, freelancers generally do not receive Form 16 because their earnings are not treated as salary income.
Money earned from writing, designing, consulting, tutoring, content creation, delivery work and other freelance services is usually counted as business or professional income. This means freelancers need to understand how their income should be reported while filing their ITR.
Before August 31, knowing the right ITR form, tax rules, payment dates and filing deadline is important to avoid mistakes and penalties.
Which ITR For Freelance?
ITR 4 is meant for individuals, Hindu Undivided Families (HUFs) and eligible firms that have business or freelance income and want to use the presumptive taxation scheme. You can choose this form if your total income is up to Rs 50 Lakh and your earnings come from a business or profession covered under the presumptive tax rules. The form is not available to LLPs.
Freelance earnings are generally reported in the ITR under Profits and Gains of Business or Profession. Before filing the return, freelancers should carefully check their income records to make sure all details are correct.
This includes matching the invoices issued and payments received with their records. Bank statements should also be checked to confirm the money received during the year.
Taxpayers should compare these details with their Form 26AS and Annual Information Statement (AIS), which show reported income and tax related information.
They should also check their TDS certificates to confirm the tax already deducted. If they maintain books of accounts or other accounting records, these should also be reviewed before submitting the ITR. Keeping these records organised can help freelancers avoid errors and make the tax filing process easier.
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