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How Freelancers Calculate Advance Tax?

    Mr. C.S. Sudheer | Friday, December 01,2017, 05:42 PM

How Freelancers Calculate Advance Tax?


It's the time for freelancers in India. More than 1.5 crore citizens have taken to freelance to earn their livelihood. If you get income from a work that requires you to use manual or intellectual skills, this income is taxed under the head, "Profits and gains of Business and Profession."

So how are freelancers taxed? If you are a freelancer who is under 60 years and your net taxable income is more than INR 2,50,000 a year, you must pay tax on this income. Taxable income is gross income minus any tax deductions or tax exemptions allowed for the Financial Year.

Want to know more on tax planning? We at will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. is not a seller of any financial products. We only provide FREE financial advice / education to ensure that you are not mis-guided while buying any kind of financial products.


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How Freelancers Calculate Advance Tax?


Before you learn how freelancers calculate advance tax, let's first understand what is advance tax. Advance tax means you pay income tax in advance, instead of a lump sum payment at the end of the year. If your total tax liability for the financial year is INR 10,000 or more, then you must pay advance tax. 



1. Due dates for payment of advance tax FY 2017-18



SEE ALSO: How freelancers can save tax?


2. How freelancers calculate advance tax?


  • freelancers must first estimate total income


As you are a freelancer, you have to estimate your annual income from all clients.


  • freelancers then subtract expenses


You and other freelancers can deduct expenses from freelancing income. These expenses may be rent you pay for the workplace, your phone/internet bills, travel expenses to meet clients, depreciation on assets like laptops and so on. You can also deduct money paid to other freelancers, SEO or digital marketing expenses.


  • freelancers add other sources of income


You then add other sources of income like Income from house property, interest income, capital gains while filing ITR.


  • freelancers enjoy tax deductions


Freelancers enjoy Chapter V1-A deductions like Section 80C, Section 80CCC, Section 80D, Section 80E, Section 80GG, Section 80DDB, Section 80DD and so on.

These tax deductions help reduce your total income to arrive at your taxable income. 


  • freelancers calculate tax due on total income



Income Tax Slabs FY 2017-18  for citizens less than 60 years



Surcharge: 15% of income tax where total income exceeds  INR 1 Crore.

Cess: 3% on total of income tax + surcharge.


Apply the income tax slabs of FY 2017-18 on your taxable income to calculate your income tax due. If any TDS has been deducted, make sure to account for it. You are then taxed as per the income tax slab you fall under.     


  • freelancers pay advance tax


If your tax due exceeds INR 10,000, you must pay advance tax dues by the requisite due dates as specified above.


SEE ALSO: Tax deductions for freelancers


3. Take a look at Presumptive Income Scheme


If you are a freelancer, you can opt for the presumptive income scheme, if your total gross receipts do not exceed INR 50 Lakhs a year. If you or any professional opts for this scheme, your income would be assumed at 50% of the total gross receipts for the year under Section 44ADA. You can claim 50% of your total receipts as a business expense, without the need to maintain any books of accounts.

Always remember to pay advance taxes on time. Advance tax payments made before 31st March of the year must be 100% or more of your total tax payable. Be Wise, Get Rich.


Mr. C.S. Sudheer

Mr C.S.Sudheer is a management graduate. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of He aims to build a nation that is financially literate with investment savvy citizens.

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