Income earned by freelancers are known as freelancing income. As per Income Tax laws in India , freelancing income is categorized as self employed income and for tax purpose it is treated as “Profit and gains from business or Profession”. Any Income , which is earned by displaying intellectual or manual skills is the Income from a profession according…
The post TAX RULES APPLICABLE FOR FREELANCERS IN INDIA first appeared on Deo Kumar & Company - online accountant in India for startups, online accounting services in Delhi, CA in Delhi, Income Tax Return eFiling.
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Income earned by freelancers are known as freelancing income. As per Income Tax laws in India , freelancing income is categorized as self employed income and for tax purpose it is treated as “Profit and gains from business or Profession”. Any Income , which is earned by displaying intellectual or manual skills is the Income from a profession according Income tax laws in India.
CALCULATION OF GROSS INCOME AND NET INCOME OF FREELANCER
Gross Income
Aggregate of all receipts whether in cash or in bank will be treated as Gross Income of Freelancer.
Net Income
All expenses incurred for the freelancing work will be allowed as deduction from Gross Income.
Net Income = Gross Income-All expenses relating to freelance work
Gross Taxable Income
If freelancer earn any other income other than freelancing income such as Interest, Rent, Profit on sale of property, that income will be added in net income of the freelance. Total of this is called gross total income.
Gross Total Income = Net Income + Income from any other sources
Net Taxable Income
Income tax laws allow deduction of some saving made by individual/HUF under section 80C to 80 U from Gross Total Income. This encourages taxpayers to save for futurs.
Net Taxable Income = Gross Total Income – Deduction U/s 80C-80U
Advance Tax for a freelancers
If the Income tax liability during a financial year exceeds Rs.10,000/- , the freelancer has to pay tax in advance. Payment of this tax is called Advance Tax. Advance tax is paid in every quarter during financial year.
Due date of advance tax:
On or before 15th June 15% of Total Tax Due
On or before 15th September 45% of Total tax Due
On or before 15th December 75% of Total Tax Due
On or before 15th March 100% of Total Tax Due
ITR
A Freelancer can opt for ITR 3 or ITR 4 for filing Income Tax Return.
GST LAWS AND FREELANCERS
If gross receipts from freelancing services exceeds Rs. 20 lakhs during the financial year, the GST Laws apply to freelancer and freelancer is mandatory required to register under GST. In India 18% GST applies on most services. So freelancer must charge 18% GST from Clients.
THINGS TO REMEMBER UNDER GST
For more information visit www.cadkc.in
The post TAX RULES APPLICABLE FOR FREELANCERS IN INDIA first appeared on Deo Kumar & Company - online accountant in India for startups, online accounting services in Delhi, CA in Delhi, Income Tax Return eFiling.
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