With jobs being scarce these days, many people are taking up freelancing assignments. Freelancing is a lucrative option. But, unlike filing ITR for salaried people, filing income tax returns for a freelancer may be difficult.
A freelancer may have multiple sources of income. This is why he needs to pay attention to income tax filing. Is filing ITR difficult? We will help you there. You can now file Income Tax Returns absolutely free through IndianMoney.com. You just need to click on the icon “FREE Income Tax Filing before 31st Aug”, and file your income taxes in just 5 minutes. If you are stuck while filing income tax returns, you would get a call offering help to complete the tax filing process.
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If you get hired to work on a specific assignment for a specific time, it’s a freelancing assignment. You get paid when the assignment is completed called freelancing income.
The income you get by displaying manual or intellectual skills is income from profession. This income is taxable as “Profits and Gains from Business or Profession.”
The aggregate of all receipts you get when carrying out your profession is the gross income. Collect this information from the bank account statements if you receive professional income through banking channels.
See Also: Documents Needed When Filing ITR
Freelancers are allowed to deduct expenses from income while doing the job. These are the expenses which can be claimed:
See Also: How To E-File ITR Form -1 In 2 Minutes?
Let’s say you have bought a computer at Rs 60,000 for freelancing work. Let’s assume depreciation is calculated through the straight line method or SLM at 33.33% a year. Then, Rs 20,000 is charged as yearly expenses. Within the next 3 years the asset is considered to be fully depreciated.
Each and every professional service rendered attracts 10% Tax Deducted at Source or TDS. The person who pays the money deducts the TDS and deposits it with the Government. You can claim a tax refund for TDS just like salaried employees.
See Also: Avoid These Mistakes While Filing ITR
See Also: How To File Income Tax Returns?
You may have to submit either ITR-3 or ITR-4 Form. ITR-3 Form is income from business or profession. Some professionals can choose presumptive taxation scheme and declare 50% of gross receipts as income in ITR-4 Form.
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