A freelancer can opt for only ITR-3 or ITR-4 to file income tax return (ITR)
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Income from freelance jobs is treated as ‘profits and gains from business or profession’ for taxation purpose. This is because such income is seen as earnings from self-employment. Here are the tax rules applicable to income earned by freelancers:
A freelancer can opt for only ITR-3 or ITR-4 to file income tax return (ITR).
Even if a salaried individual has earned any income from freelancing outside of their job in a particular financial year, he/she will have to opt for an ITR form eligible to those with income from business or profession.
As with business income, taxpayers with freelance income also have the option to deduct from their income such expenses that are incurred to carry out the freelance work.
These deductible expenses include rent of the property you may have taken to carry out the work and any repair costs incurred by you on such property, any repairs carried out on electronic equipment such as laptop or personal computer that you own to carry out the work, office expenses such as purchasing supplies, internet bills and phone bills, expenses related to travel undertaken for the work, conveyance bills of commute to office/co-working space and depreciation value of equipment such as laptop used in this regard.
For expenses that may qualify as personal, such as phone bills, you can allocate a portion of the expense to professional use to claim the deduction.
Freelancers are not allowed to claim the ₹50,000 standard deduction while filing ITR.