The season for filing income tax returns (ITR) for the financial year 2024-25 is here. The Income Tax Department has already notified ITR-1, 2, 3, 4 and 5 forms for filing the returns for Assessment Year 2025-26.

While the process for filing tax returns for salaried individuals is relatively simpler, the task can get more complicated when it comes to freelancers. A freelancer typically works for multiple clients on various projects or assignments. Professionals from various fields like consultants, content writers, software engineers and graphic designers often work on a freelance basis. 

So, it’s important for freelancers and self-employed professionals to keep a track of all their receipts in a financial year and report them properly in the ITR.

Under the Income Tax Act, 1961, income from freelancing is considered as ‘’profit and gains from business and profession’’.

Freelancers have the option to file their tax returns under the presumptive taxation provision under Section 44ADA. Eligible freelancers can only claim the benefits of presumptive taxation under this section when their income in a financial year does not exceed Rs 50 lakh.

Deductions For Freelancers

Deductions are available to freelancers under Sections 80C to 80U of the Income Tax Act. Some of the deductions which freelancers can claim include:

  • Section 80C: Payment for life insurance premiums, principal amount of home loan, pension plans, etc.

  • Section 80D: It covers the deduction for medical insurance premiums.

  • Section 80E: Payment of interest on education loan.

  • Section 80G: This includes deductions on donations to charitable trusts and relief funds.

However, it’s important to note that the deductions and exemptions may vary depending on the tax regime you choose. While the old tax regime allows multiple deductions, the new tax regime offers only limited deductions but more flexible tax slabs.

ITR Forms For Freelancers

Freelancers need to submit the ITR-3 or ITR-4 form to file their returns. The ITR-3 form is meant for income derived from business or profession. For income that is calculated on a presumptive basis, the ITR-4 is applicable. 

Steps To File ITR For Freelancers

1.    First, you need to calculate the gross income for the entirety of the financial year.

2.    Then you need to estimate the deductions and expenses that you can claim in the financial year. 

3.    Now you need to select the appropriate form for filing the tax returns. You can choose from ITR-3 and ITR-4 for filing the returns.

To conclude, freelancers must develop a thorough understanding of how the Income Tax Act, 1961, applies to their income. By properly calculating the deductions and selecting the right form for filing their returns, they can ensure that the process remains hassle-free. 

. Read more on Personal Finance by NDTV Profit.Income from freelancing should be reported under ‘’profit and gains from business and profession’’ while filing the ITR.  Read MorePersonal Finance 

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