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Freelancer ITR guide: Forms, deductions, foreign income, deadline
The Aug 31 ITR deadline is close. Freelancers must choose the right form, claim actual business expenses, and handle foreign income correctly. A tax expert explains what to track.
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The August 31 deadline for filing income tax returns is a week away, and for freelancers the process can feel more tangled than it does for salaried employees. Unlike someone who gets a Form 16 from a single employer, a freelancer collects payments from a handful of clients, projects, or platforms. The tax return form they choose, the expenses they claim, and how they handle foreign-currency income all depend on how they structure their work.
Which ITR form to pick
Freelance income falls under the head “Profits and Gains of Business or Profession” under the Income-tax Act. That classification determines which form a freelancer needs. For most individual freelancers who are not required to get their accounts audited – typically those with turnover below the audit threshold – the right form is ITR-3 or ITR-4, depending on whether they opt for the presumptive taxation scheme under Section 44ADA.
The presumptive scheme lets a freelancer declare 50% of gross receipts as income if total gross receipts are ₹50 lakh or less in a financial year. Under that route, the freelancer does not need to maintain detailed books or get accounts audited. Anyone who chooses to report actual income after deducting business expenses must use the regular scheme and file ITR-3.
Expenses vs. standard deduction
Salaried employees can claim a standard deduction of up to ₹75,000 under the new tax regime. Freelancers do not get that. Instead, they deduct actual business expenses from their gross receipts. Eligible expenses include rent for a workspace, internet and phone bills, software subscriptions, travel for work, professional development courses, and fees paid to subcontractors.
“Freelancers should maintain invoices and receipts for every expense they claim,” said Pranav Sai S, a tax expert at ClearTax. An unsupported claim can be disallowed during assessment.
Deductions available to everyone