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Four Strategies to E-file for the Self-Employed

By Mohammed S Chokhawala

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Updated on: Jul 12th, 2024

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2 min read

Filing income tax returns is more complicated for the self-employed than they are for salaried people. What company HR does for their salaried employees, self-employed people have to take care on their own. You may need on guidance on which ITR to file, which deductions to avail of, which regime to opt for etc. ClearTax can tell you four e-filing strategies that the self-employed can use to make the process simpler.

Understanding the Tax Treatment 

A self-employed individual is one who doesn’t earn a fixed salary from a company. You are hired on a contractual or an assignment basis your intellectual or manual skills. Hence, from a tax perspective, your income is Profit & Gains of Business & Profession. You have to pay taxes on the combined income you earn in a financial year from the different clients you have. All earnings, no matter how small, should be added to your gross income for the year.

Since your income is treated as profits and gains of a business, even you can claim certain expenses that you have incurred towards getting this business. You can use these expenses to reduce your income and tax on it. These expenses include rent for office space, meal and entertainment expenses for client meetings, depreciation of computers and other equipment, travelling costs, etc. You should be claiming the deductions of expenses that you incurred during your assignments.

You also have a choice to opt for the presumptive taxation under Section 44AD wherein you can offer 8%/6% of your turnover as income. You will also not be required to maintain books in that case.

Further, you also need to choose which tax regime you need to opt for considering your investments and other deductions that you may need to avail.

Choosing the Right ITR 

For self-employed individuals, the correct ITR form would be ITR-3 or ITR-4. Choosing the right ITR is an important step in e-filing your income tax returns. Refer article for more details on how to file an ITR.

Tax Deducted at Source 

Whenever you receive a payment from a client, you will receive it after the deduction of tax (TDS) on it. You should also be aware of Section 194J/194C of the Income Tax Act which mandates TDS from payments made to professionals/contractors. TDS is usually deducted at the rate of 10%/2% on the payments made to you. But the good news here is that, just like salaried individuals, even you can claim a refund on the TDS that is deducted on your behalf through the process of e-filing of your tax returns.

Other Income

You must not forget to include income from all other heads of income such as interest income, dividend income, and gains from the sale of shares/immovable properties to correctly arrive at your taxable income. Whenever you receive a payment from a client, you will receive it after deduction of tax (TDS) on it. 

These are a few ways that self-employed individuals can use to simplify income tax filing. E-file before the due date to avoid an income tax notice from the tax department. 

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Frequently Asked Questions

What is the due date for filing of return for the Year 2023-24?

The due date for filing of return is 31st July, 2024 for taxpayers who are not required to get tax audit done. For taxpayers who are required to get tax audit done due date of return filing is 31st October, 2024.

Can I opt for the old regime if I want to take deductions which are not allowed under new regime?

Yes, from FY 2023-24 new regime has been made the default regime, so you need to opt out of new regime to opt for the new regime.

Will I need a chartered accountant to certify my return?

No, you need not require a chartered accountant to certify your return to file with the tax authorities.

About the Author

I'm a chartered accountant, well-versed in the ins and outs of income tax, GST, and keeping the books balanced. Numbers are my thing, I can sift through financial statements and tax codes with the best of them. But there's another side to me – a side that thrives on words, not figures. Read more

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Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.

Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.

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