Guide to file freelancers Income tax


What is the nature of income of a freelancer?

The income from a freelance job is always income from profession. Freelancer is an individual doing jobs for others on the basis of an oral or written agreement. Since there is no employer employee relationship the income is not salary or allowances


The total income received for his service can be treated as the gross revenue. The expenses related to his profession to accomplish the job are to be deducted from the gross revenue and the surplus of revenue after expenses are taxable as per Income Tax Act. Since the freelancer is an individual and at the same time the income is from profession, the income tax is to be filed in form ITR4


Long term and term classification depends on the duration it held as owner.


What is the form used for filing freelancer’s income?

The form depends on the type of income and status of the assesse together. Normally the freelancers are individuals and they need only ITR4. If the freelance work is taken in the name of a Company or Firm ITR4 is suitable for the same.


What are the preparations for filing income tax for freelancers?


All the income derived by a resident Indian is taxable as per Income Tax Act. In India, most of the software professionals or designers do job and freelance work together. Because of the constraints the work is taken in the name of his wife or other members of his family.


If the income is received by an individual, the basic tax slabs, deductions, exemptions etc. are also applicable. If you believe that you will become in the tax net, try to pay advance tax in installments. This will reduce your tax burden at the end of the financial year and can avoid paying interest also.


The basis deduction can be availed by proper investments eligible under section 80C. Certain expenses like medical insurance premium, donations, tuition fee of the kids, housing loan repayments etc. can also eligible for deduction from income.


Providing provisions for expenses is another way to reduce taxability. Depreciation of assets is another way to reduce tax. The loss from other head of income like, interest on house property loan, loss from other business can also be set off from the income available.


What are the exemptions and deductions available for a freelancer’s income tax?


Deduction under Section 80C to 80U can be availed. Basic standard deduction for individuals can also be claimed. A portion of the house hold expenses (which are partially or fully used for business purpose) can be claimed as business expenses. For e.g. a portion of the car expenses, electricity, telephone, travel, entertainment expenses, repairs and maintenance, printing and stationary, are in the nature of business expenses.


I am an individual working in a firm and I am doing freelance work in the name of my wife. Most of my works are from foreign countries. Can you suggest me the precautions and also the income tax liabilities?


I was getting some income from foreign country and which is less than the taxable limit. Any implication for not filing my tax returns?

Even if you earned income, if it falls below the taxable limit you don't have to file a tax return. The taxable limit varies according to your age and filing status.If any notice mentioning the non-filing, there is an option to record compliance in the Income Tax website.


Guide to file Bloggers Income tax


What is the nature of income of a Blogger?


Bloggers are normally publishing rich text in relevant text in their own web pages or other media frequently. Subsequently they have ample opportunities to earn money from advertisements like google ads and other media. Since they are strong enough in content writing and rich text, they may earn income from content writing too. The sub knowledge is another mileage to earn money from news media and other publications or companies.


All these income are service revenue computed under the head ‘income from business or profession’.


What is the form used for filing blogger’s income?


Any individual doing business or profession should file his income tax in ITR 4. Since the income from Blogging is pure a business or profession and hence it is advisable to file in ITR 4 form.


What are the preparations for filing income tax for bloggers?


Like any other business persons, the bloggers are supposed to file their income tax in ITR 4. In ITR 4, there are two major sections for Balance sheet and profit and loss account statement entry. The depreciation statement if any can also be claimed. The loss if any can be set off or can be carried forward to the future 8 years.


The essential 7 elements or documents required to be kept in hand before filing is as follows.


1. balance sheet if available


2. profit and loss account, is a must


3. depreciation statement, if available


4. deduction and exemption supportive documents or details


5. tax remitted details or 26AS or form 16A if available


6. personal details, pan car details


7. bank account details