ITR Filing 2025: The world of freelancing is growing rapidly today, but along with it it is equally important to have an understanding of rules like tax, TDS and GST.
In India, freelancers have to pay their own tax, whereas the tax of employed people is paid by their company by deducting it from their salary. It is necessary for every eligible citizen of the country to pay income tax. In fact, as the time for filing income tax returns approaches, many freelancers and consultants are confused about how their tax calculation differs from that of salaried people.
The main difference is not just limited to the choice of ITR form, but also the calculation of tax, deductions and filing deadlines. While filing ITR, the income of salaried persons is taxed as ‘salary’ whereas the income from freelance or consultancy work falls under the “profits from business or profession” category. This classification determines what deductions are available and how you record.
Rules for deduction of tax
Salary class people are given Form 16 by the company. On the other hand, freelancers have to follow more stringent rules. Companies deduct tax at source before paying salary to salaried class people. On the other hand, freelancers have to manage and pay their taxes themselves. Freelancer taxpayers can choose ITR 3 or ITR 4 for filing ITR.
TDS Deduction
TDS means Tax Deducted at Source. This is a method by which the government deducts tax on your income in advance so that there is no tax evasion later. Usually the client deducts 10% TDS before making your payment and deposits it to the government under your PAN number (Permanent Account Number). You should collect Form 16A from your clients and match it with Form 26AS to ensure that the tax deducted is correct. This will allow you to claim the deducted tax while filing your income tax return and avoid paying tax again.
Do all freelancers have to register under GST?
If your annual income is more than Rs 20 lakh (or Rs 10 lakh in some states), you must register under GST. After registration, you will have to pay 18% GST on invoices to your customers in India. GST registration and filing of returns from time to time may be necessary. Following the rules not only helps in avoiding penalties but also ensures that your business continues without any interruption.
How to do tax filing?
Freelancers usually have to file taxes using ITR-3 or ITR-4 form . If you opt for presumptive taxation under section 44ADA, you can pay tax on 50% of your total income. This method is easy and does not require much calculation. You should also keep the receipts of professional expenses like your office rent, internet bill, software subscription etc. This can help you reduce your taxable income.
