๐กFor freelancers in India, understanding and managing taxation is crucial for financial stability and compliance.
Freelancers must declare their income under the head “Profits and Gains from Business and Profession” and can benefit from the presumptive taxation scheme under Section 44ADA. This scheme simplifies tax computation by assuming 50% of gross receipts as income, eliminating the need for detailed accounting.
Key steps include:
โก Accurate Income Calculation: Keep detailed records of all invoices and payments received.
โก Expense Deductions: Deduct eligible business expenses such as office rent, travel, and internet costs.
โก Timely Filing: File returns using ITR-3 or ITR-4 forms, depending on your chosen scheme. Late filing can attract penalties.
โก Investment in Tax-saving Instruments: Utilize deductions under sections like 80C for investments in PPF, ELSS, and others.
It’s also essential to assess if GST registration is required, especially if your annual turnover exceeds the threshold.
Properly navigating these aspects can save you from unnecessary penalties and optimize your tax liabilities.
