Table of Contents
- Who Is Considered a Freelancer or Creator?
- Which ITR Form Should You Use?
- Understanding Presumptive Taxation (Section 44ADA)
- When to Maintain Books of Accounts
- Step-by-Step Filing Process
- Deductions You Can Claim
- TDS & Advance Tax Considerations
- FAQs
1. Who Is Considered a Freelancer or Creator?
You’re treated as a self-employed professional (not salaried) if you:
- Offer services as a writer, designer, coder, consultant, etc.
- Earn through platforms like Upwork, Fiverr, LinkedIn, YouTube, or Instagram
- Receive income from multiple clients without an employer-employee relationship
This also applies to influencers, educators, and small business owners.
2. Which ITR Form Should You Use?
| ITR Form | Suitable For |
|---|---|
| ITR 3 | Professionals/freelancers maintaining books of accounts |
| ITR 4 | Those opting for presumptive taxation (44ADA) |
Choose ITR 4 if:
- Your gross receipts are up to ₹50 lakh
- You want to declare 50% of gross receipts as profit and pay tax accordingly
- You don’t want to maintain books of accounts
3. Understanding Presumptive Taxation (Section 44ADA)
Under Section 44ADA, eligible professionals can:
- Declare 50% of their gross receipts as taxable income
- Avoid maintaining detailed expense records
- Pay tax on that 50% (after Chapter VI-A deductions)
Applicable to:
- Legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration, and any other notified professions
Example:
Gross receipts: ₹20 lakh → Deem ₹10 lakh as income → Pay tax on ₹10 lakh (after 80C, etc.)
4. When to Maintain Books of Accounts
If you:
- Earn more than ₹50 lakh, or
- Declare income less than 50% under 44ADA, or
- Don’t opt for presumptive scheme
Then:
- You must maintain books of accounts
- May require a tax audit under Section 44AB if profit < 50% and income > ₹2.5 lakh
5. Step-by-Step Filing Process
Step 1: Log into incometax.gov.in
Use PAN-based login and select “e-File → Income Tax Return”.
Step 2: Select ITR 4 or ITR 3
For most small freelancers, ITR 4 is the easiest.
Step 3: Fill Business Details
- Nature of business: Choose codes like “0708 – Freelancing” or “16001 – Content Creation”
- Gross receipts: Total money received
- Presumptive income: 50% of gross (auto-calculated)
Step 4: Claim Deductions
- Section 80C: LIC, PPF, ELSS
- Section 80D: Medical insurance
- Section 80G: Donations
Step 5: Confirm TDS Credits
Check Form 26AS and AIS for TDS deducted by clients or platforms.
Step 6: Verify Tax Payable or Refund
System auto-computes tax. Pay balance if needed.
Step 7: Submit and e-Verify
E-verification can be done via Aadhaar OTP or net banking.
6. Deductions You Can Claim (if using ITR-3)
If not using presumptive taxation and filing under ITR 3:
- Office rent or co-working space charges
- Internet, phone bills
- Travel expenses for work
- Equipment: laptops, software, etc.
- Freelancer assistants or part-time staff
- Depreciation on assets
Pro tip: Maintain invoices and payment proofs for all expenses.
7. TDS & Advance Tax Considerations
- If clients deduct TDS at 10%, adjust it against your final tax liability
- If your tax payable exceeds ₹10,000, you must pay advance tax quarterly (June, Sep, Dec, Mar)
- Delay in paying advance tax may lead to interest under Sections 234B & 234C
8. FAQs
Q1. Can I file ITR if I earned income through Upwork or Fiverr?
Yes. Declare it as professional income under ITR 4 (presumptive) or ITR 3.
Q2. Is TDS deducted on freelancer income?
Yes. Most Indian clients deduct 10% TDS under Section 194J. Foreign clients do not deduct TDS.
Q3. What if I received payments in USD or other currencies?
Convert to INR using SBI’s TT buying rate on the date of receipt and report as foreign income.
Q4. Can I switch from presumptive to normal taxation later?
Yes, but if you opt out once, you cannot opt back in for 5 years.
Q5. Do I need GST registration as a freelancer?
Only if your annual turnover exceeds ₹20 lakh (₹10 lakh in NE states) or if you’re exporting services.
Stox N Tax 
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