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ITR Filing for Freelancers and Consultants: What You Need to Know
You have left the 9-to-5 cycle, said goodbye to cubicles and embraced the freedom of freelancing. You’re your own boss, working from your favourite coffee shop – or maybe your bed – and calling the shots. It’s all freedom, flexibility and opportunities………until income tax season hits.
As a freelancer or a consultant in India, you don’t get a neat little Form 16 from HR. You’re flying solo – the HR, accounts and finance team all rolled into one. Now, we’re here to guide you through the income tax applicability on freelancer and ITR filing, step-by-step, so you can handle it with confidence.
1. What is Considered Freelancing or Consulting Income?
If you work independently, providing – writing, designing, developing, coaching, consulting services, etc. – you’re considered a freelancer or consultant. Your income comes under the head of “Income from business or profession” under the Income Tax Act.
Unlike salaried employees, your earnings may be irregular or project-based, and you must file taxes based on your total income, whether from one or many clients — in India or abroad (International tax planning).
2. Why freelancers and consultants must file ITR?
If you earn more than ₹2.5 lakh in the old regime and ₹3 Lakh in the new regime in a financial year, you’re legally required to file an Income Tax Return (ITR). Since you don’t have an employer handling taxes for you, it’s your responsibility to report your income and pay what’s due.
Beyond just following the rules, filing your ITR comes with real benefits like:
- Acts as proof of income for loans, visas, credit cards and other legal requirements;
- Keeps you safe from sudden IT department notices;
- Carry forward of losses from business, capital assets & house property
- Saves you from unnecessary interest, fines and penalties for non-compliance/non-filing.
It’s not just compliance – it’s proof of your professional work and financial credibility.
3. Choosing the Right ITR Form for freelancers and consultants
Select the correct ITR form based on how you report your income:
- ITR-3: Use if you’re reporting actual income & expenses. You’ll need to maintain books and report net profit after deductions.
- ITR-4 (SUGAM): For professionals under Section 44ADA with receipts under ₹50 lakh. Declare at least 50% of your gross income as profit, no need for detailed books.
4. What is Presumptive Taxation (Section 44ADA)?
Section 44ADA provides a simplified tax scheme for freelancers and self-employed professionals whose gross receipts don’t exceed ₹ 50 lakh.
Features:
- Atleast 50% of gross receipts is taxable.
- No need to maintain detailed books or get audited under Section 44AB.
- Applies to professionals like technical consultants, doctors, lawyers, architects, designers and more.
- If cash receipts < 5%, limit extends to ₹ 75 lakh – a boon for small-scale freelancers.
5. How to Calculate Your Freelance Income
Every currency you earn whether through platforms like Upwork, Fiverr, Truelancer, Toptal or Freelancer, needs to be reported. This includes both payments from domestic and international clients.
- Project payments (lump sum or hourly)
- Consulting fees
- Advance payments
- Foreign income (from PayPal and Wise transfers, etc.)
6. Maintaining Books of Accounts
If you cannot opt for presumptive taxation, maintain proper records, including:
- Journals, ledgers, cash books
- Expense logs with bills
- Invoices, bank statements, receipts
It is wise to maintain books of account to ascertain your profitability and future financial planning with help of an expert bookkeeper.
7. TDS, Advance Tax and GST Considerations
As a freelancer, your other tax considerations are:
- TDS (Tax Deducted at Source): Clients may deduct tax before paying you, which may appear in your Form 26AS, this can be claimed during ITR filing.
- Advance Tax: If you owe tax exceeding ₹ 10,000, you must pay advance tax in four instalments:
| Due Dates | % of Estimated Tax Liability |
| 15th June | 15% |
| 15th Sept | 45% |
| 15th Dec | 75% |
| 15th March | 100% |
- GST: If your annual turnover exceeds ₹ 20 lakh (or ₹10 lakh for special category states), you must register for GST. However, GST is a separate tax from income tax, but your receipts as per GST Returns & Income tax return should map generally.
8. What Documents Do You Need for ITR filing as a freelancer?
| Document | Description |
| PAN & Aadhaar Card | Identity Verification |
| Form 26AS | TDS deducted by clients (available on the Income Tax portal) |
| Annual Information Statement (AIS) | Reflects high-value transactions (available on IT portal) |
| Bank Statements | Proof of income |
| Client Invoices | Invoices issued for services rendered |
| Expense Receipts | Receipts for rent, software, phone, internet, etc. |
| Sale/Purchase Deed | If you sold or purchased immovable property |
| Investment Proofs | For investments like PPF, insurance, donations etc. |
| GST Returns | If applicable, for reconciliation |
Keep digital and physical copies organized.
9. How can freelancers and consultants file their ITR online?
Once you’ve gathered all your income and expense details, you can start DIY filing ITR online:
- Visit https://incometax.gov.in and log in or register.
- Go to e-File < Income Tax Return < Choose the right form
- Enter details: Fill in your income, deductions, taxes paid and others using Income tax guide.
- File the return: Once everything looks correct, submit your return.
- Verify your return.
10. What are the tax deductions available for freelancers and consultants?
This depends whether you are opting for new tax regime vs old tax regime or presumptive taxation or regular taxation. The basic deduction and exemption available for freelancers and consultants are:
- Section 80C: PPF, ELSS, NSC, etc.
- Section 80D: Health insurance premiums
- Section 80E: Education loan interest
- Section 80G: Donations
- Section 80TTA: Savings account interest
- Depreciation: On laptops, equipment, etc.
- Business Expenses: Rent, internet, software, coworking space, ads, client entertainment, etc. in pursuance of profession.
Keep bills, receipts and digital proofs of every expense you want to claim. Remember, under the presumptive taxation scheme, you won’t have to itemise each expense. But if you’re filing under ITR-3, keeping track of these costs will be critical to arrive at total income. In fact, having proper books of accounts if you are filing under regular tax scheme is imperative.
11. Consequences of not filing ITR on time
The extended due date for FY 2024–25 is 15 September, 2025. unless extended further.
If you miss this:
- ₹ 5,000 late fee if income exceeds ₹ 5 lakh.
- ₹ 1,000 if your income is below ₹ 5 lakh.
- Interest under Section 234A/B/C may also apply on unpaid taxes.
- You lose the chance to carry forward certain losses.
- Moreover, you also lose the option to choose between new or old tax regime. It would take the default new tax regime.
And worst of all, you might get notices and scrutiny from the IT department for non-compliance.
12. Common Mistakes Freelancers Make When Filing ITR
Freelancers should avoid the following:
- Choosing the wrong ITR form
- Forgetting to declare foreign income
- Not paying advance tax
- Not taking expert tax advisory
- Not keeping organised records
- Not paying attention to tax checklist
- Forgetting to check TIS, AIS and Form 26AS before filing the return
Final Tips: We Are With You
To all the freelancers out there: You are the heartbeat of innovation. Every hour you pour into your work shapes industries, inspires change and builds the future. We see your hustle – and we’re here to support you every step of the way.
As far of taxes and compliance is concerned, think of it not as a chore, but as part of your freelance lifestyle and business rhythm – a habit you build into your routine that keeps things running smoothly and stress-free.
Join hands with Master Brains on a smooth-sailing legal and tax-efficient professional journey.
ITR Services for freelancers and consultants Starting at Just Rs. 1,999 and Business Advisory services for freelancers starting at Just Rs. 2,499 per half hour.
You need to call or whatsapp today at +91-8595867402.
Team Master Brains
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