Four strategies to e-file for the self-employed

By Annapoorna


Updated on: Jan 13th, 2022


4 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. 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 for 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.

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.

Tax deducted at source Whenever you receive a payment from a client, you will receive it after deduction of tax (TDS) on it. You should also be aware of Section 194J of the Income Tax Act that mandates TDS from payments made to professionals. TDS is usually deducted at the rate of 10% 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.

Claiming expenses to reduce tax outgo 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 computer and other equipment, travelling costs, etc. 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. This article was published on Yahoo Finance on 3 August 2016.

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About the Author

I preach the words, “Learning never exhausts the mind.” An aspiring CA and a passionate content writer having 4+ years of hands-on experience in deciphering jargon in Indian GST, Income Tax, off late also into the much larger Indian finance ecosystem, I love curating content in various forms to the interest of tax professionals, and enterprises, both big and small. While not writing, you can catch me singing Shāstriya Sangeetha and tuning my violin ;). Read more

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Quick Summary

Self-employed individuals face more complex tax filing than salaried employees. ClearTax offers e-filing strategies and tips on tax treatment, choosing the right ITR, TDS, and claiming expenses. They can simplify filing by understanding these points. The article recommends e-filing before the due date to avoid income tax notices.

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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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