Issues on Provisions Regarding for Carrying Forward of Loss under Section 80-IA (5) Of Income T...
A freelancer or freelance worker is a term that is commonly used for a person who is self-employed and is not necessarily engaged with or committed to a particular employer for the long-term. In this article, you will learn more about income tax applicability on freelancers.
A freelancer is a person who is self-employed and generally works on a project basis or assignment basis for clients. As such, there is no requirement of special education or qualification for doing freelancing. Freelancers are available in almost all kind of fields such as accounting, photography, web programming, office administrator, personal assistant, designing, architect, finance, data searching, BPO, KPO etc. With the growing reach of the internet, online or web freelancing becomes a good avenue for part-time or even full-time earnings.
Freelancers generally earn by rendering the services to their clients.
There are 3 types of taxes on freelancer Income in India which are:
Income tax basically imposed on the income which is earned by the freelancers. It doesn’t matter that its earn within in India or outside India, so you have to always show your income to the government of India by the way of Income Tax Filings in India.
Freelancer Income tax Filings or any other simple sole Proprietorship firm’s income tax filings are the same. In both cases, you have to file the taxes mandatory if your earning is more than 2.5 lakh in a year.
Read our article:Do Freelancers Need to Pay Tax in India?
Freelancer Income is the sum of all the receipts from carrying your professional or freelancer work for your clients or advertisements income as a blogger. You can use your bank statements or payment gateways or PayPal or any other payment medium which you would use to getting payments from clients or ad networks for the add receipts income.
There is a lot of Expense which is incurred by the freelancer on their work. As a result of which they are allowed to claim all the necessary expenses as a deduction from their income earned. Following are a major deduction from your income –
Apart from the Expenses, you claim the deduction also. Here is some useful deduction for the freelancers
Example – Mr. Rajiv, a freelancer has the following taxable income
Total Revenue/Total Turnover = Rs. 13,00,000
Less: Total expenses incurred for earning revenue from freelancing =Rs. 2,00,000
Less: Total amount of Depreciation on all assets = Rs. 1,50,000
Gross Total Income = Rs. 9,50,000
Less: Deductions allowed for the specified investments = Rs. 1,00,000
Total Taxable Income = Rs. 8,50,000
Alternative Option- You can use Enterslice for filing your Income tax returns
You are not mandatorily required to register yourself under GST as the export of services is free under GST irrespective of the amount of turnover. You can register voluntarily under GST for claiming back GST paid on input services used for purpose of freelancing.
Note: In case if your turnover is more than Rs 20 Lakh and you have rendered service to an Indian based client (even if the contract amount is Rs 1) then you are required to get register in GST and require charging GST as per the applicable rate.
You are mandatorily required to get registered under GST only if your turnover exceeds Rs 20 Lakh. For more information, contact Enterslice which has a team of professionals to guide you on this.
You are mandatorily required to get register in GST as you are providing interstate services irrespective of the turnover.
According to the Income Tax law of India, any income earned in the form of freelance assignments is liable for the tax.