New Delhi: Even if you are not working a 9 to 5 job and are not a regular salaried employee, you need to file an income tax return if your income from other sources is above the income tax exemption limit. As per the income tax laws, freelancers are liable to pay taxes for the income they earn just like other salaried or business taxpayers. Freelancing income: Any income that an individual earns by displaying intellectual or manual skills is the income from a profession according to income tax laws. Such income will be taxable as “Profits and Gains from Business or Profession”. The gross income will be the aggregate of all receipts one gets in the course of carrying out their profession. The bank account statement is a document which a freelancer can rely on to cull out this information, provided that they have received all their professional income through banking channels. Deductions allowed against income for freelancers: Freelancers can deduct expenses they incurred to do the job from their income. This could be anything from tools, supplies expenses to travel expenses for meeting client. The expenses must be directly related to the job. If you take a property on rent for carrying out your work, the rent paid can be deducted. If you have agreed to pay for repairs to the rented property, repair costs can be deducted. If you own the business property and carry out repairs, those are also allowed to be deducted. Any repairs to your laptop, printer, and other equipment are also allowed to be deducted. Expenses incurred to carry out your work such as purchasing a printer, office supplies, your monthly telephone bills, internet bills, and conveyance expenses can be claimed as a deduction. The cost of travel to meet your clients within or outside of India is allowed as a deduction. Meal, entertainment or hospitality expenses It can be claimed when you conduct client meetings, take your clients out for dinner, or some other outings and money has been solely spent with the intention of getting new business or retaining existing business. Local taxes and insurance for your own business property Domain registration and apps purchased to test your product are also allowed as expenses Taxation rule: As per the provisions of Section 44ADA under the Income-tax Act, 1961, a resident taxpayer who is engaged in a prescribed profession (including engineering, and technical consultancy) and whose total gross receipts do not exceed Rs 50 lakh in a financial year (FY) can offer the income from such professions to tax on a presumptive basis. The taxable income shall be presumed to be 50% of the total gross receipts during the FY from such profession or as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the taxpayer. As per the provisions of Section 44AA, every person carrying on prescribed profession is required to maintain books of accounts. If the income from business (other than […]
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