How to File Income Tax Returns For Freelancers?

Freelancers are required to file form ITR-3 or ITR-4 and pay tax at applicable tax slab rates. However, freelancers have the option to opt for the presumptive taxation scheme under Section 44ADA and declare only 50% of their total receipts as taxable income under the head “Income From Business & Profession”.

Who is a Freelancer?

A freelancer is a self-employed individual who offers services to clients on a project or contract basis. Freelancers offer specialised services and operate on their own schedules with compensation based on particular project, task or hourly rates. It offers individuals the flexibility to to work with multiple clients simultaneously offering a wide income source rather then relying on a single employer. 

Some of the common industries for freelancing include graphic designing, content writing, programming, video editing, etc. 

Taxation for Freelancers

Income earned by freelancers are taxed at applicable tax slabs as professional income. Freelancers also have the option to opt for presumptive taxation and declare only 50% of their receipts as taxable income. 

For example, if Mr. A earned Rs. 30 lakhs in FY 2025-26 through freelancing, by opting for taxation under Section 44ADA he can declare his taxable income as Rs. 15 lakh (50% of Rs. 30 lakh) which will be taxed at slab rates. 

Freelancers can also benefit from the provisions of Section 87A rebate and benefit from tax rebate if their total taxable income is below Rs. 12 lakh under the new tax regime. 

TDS for Freelancers

Every professional service rendered by freelancers is subject to 10% TDS (Tax Deducted from Source) under Section 194J of the Income Tax Act. However, the TDS deducted can be claimed as credit against the tax liability or as a TDS refund if there is zero tax liability during filing ITR.

Advance Tax for Freelancers

As a freelancer if the tax liability for the year is more than Rs. 10,000 then advance tax has to be paid every quarter. However, freelancers opting for presumptive taxation have to pay advance tax in one single installment before 15th March.  

Deductions Available for Freelancers

Freelancers can claim the following deductions if they opt to file taxes under the old tax regime:

• Section 80C: Deductions on various investments such as life insurance premiums, ELSS, payments made towards the principal sum of a home loan, SSY, NSC, SCSS, payment made towards pension plans, NPS payment, etc.
• Section 80D: Deduction on medical insurance premium
• Section 80E: Interest on Education Loan
• Section 80EEA: Interest on home loan for first-time homeowners
• Section 80G: Income tax benefits towards donations for social causes
• Section 80GG: Income tax deduction on house rent paid
• Section 80TTA: Interest on savings accounts
• Section 80U: Deduction for disabled individuals

Which ITR Should Freelancers File?

Freelancers are required to file ITR-3 or ITR-4 depending on their other incomes. Freelancer with total income within Rs. 50 lakh opting for presumptive taxation and not having capital gains income has to file ITR-4. The due date to file ITR-3 & ITR-4 for non-audit taxpayers for FY 2025-26 is 31st August 2026. 

How to File Income Tax for Freelancers?

Freelancers should file income tax returns within the due dates for the financial year by following the below steps:

Step 1: Calculate the gross income from 1st April to 31st March of the given financial year. 

Step 2: Calculate the expenses and deductions that can be claimed for the given financial year.

Step 3: Select the following appropriate form, i.e. either ITR-3 or ITR-4 and fill in all the required details on the form by logging into the Income Tax e-Filing portal.

Freelancers can easily file ITR from ClearTax. ClearTax offers affordable pricing plans for freelancers and independent consultants. Not only do we make it hassle-free, but also enable you to deduct our fees from your income and claim it as an expense and minimise tax liability.