🔍 Introduction
In today’s digital age, thousands of people earn income as freelancers or gig workers — from content creators and designers to app developers and consultants.
But when it comes to paying tax, most are confused — Which ITR form should I use? How do I show my income? Can I claim deductions?
This article will explain step-by-step how freelancers can file their ITR for AY 2025-26, what documents are required, which sections give you deductions, and common mistakes to avoid.
🧾 1. Who Is Considered a Freelancer or Gig Worker?
You are a freelancer or gig worker if you:
- Work independently for clients (Indian or foreign)
- Receive payment directly (not through salary)
- Work on online platforms (Fiverr, Upwork, YouTube, etc.)
- Provide professional services such as designing, consulting, tuition, or development
Your income is taxable under the head “Profits and Gains from Business or Profession”.
📘 2. Applicable ITR Form for Freelancers
| Type of Freelancer | Applicable ITR Form | Remarks |
|---|---|---|
| Individual freelancer with small income (presumptive) | ITR-4 (Sugam) | For income declared under section 44ADA |
| Professional freelancer (detailed books maintained) | ITR-3 | For regular business income reporting |
| Partner in firm | ITR-3 | Include share of profit + remuneration |
Tip:
If your annual gross receipts are up to ₹75 lakh (AY 2025-26 limit), you can use Presumptive Taxation Scheme (Sec. 44ADA) — only 50% of income is taxable.
💼 3. Documents Required
- PAN & Aadhaar
- Form 26AS / AIS (for TDS and income summary)
- Bank statements (to verify total credits)
- Expense proofs (internet, laptop, rent, software, etc.)
- Invoice details to clients
- Foreign payment proof (PayPal, wire transfers, etc.)
🧮 4. Step-by-Step Guide to File ITR for Freelancers
Step 1 – Collect All Income Details
Include all freelance payments, even if received from foreign clients. Convert foreign currency to INR (using SBI TT buying rate).
Step 2 – Choose Correct ITR Form
Select ITR-3 or ITR-4 (Sugam) as applicable.
Step 3 – Compute Total Income
- Business income = Total receipts – Allowable expenses
- If using Section 44ADA, declare 50% of gross receipts as income.
Step 4 – Claim Deductions under Chapter VI-A
You can claim:
- 80C – LIC, PPF, ELSS, etc.
- 80D – Health insurance premium
- 80G – Donations
- 80TTA/80TTB – Interest income
Step 5 – Pay Advance Tax (if applicable)
If your tax payable exceeds ₹10,000 in a year, pay advance tax in four instalments.
Step 6 – File Return Online
- Visit https://www.incometax.gov.in
- Log in with PAN and OTP
- Select “File Income Tax Return” → AY 2025-26
- Fill details → Upload computation → Submit → E-verify
Step 7 – E-Verification
Complete using Aadhaar OTP, bank account, or net banking. No physical copy needed.
📊 5. Example Calculation
Example:
Riya, a freelance graphic designer, earned ₹12,00,000 during FY 2024-25.
She opts for Section 44ADA.
- Presumptive income = 50% × ₹12,00,000 = ₹6,00,000
- Deductions (80C, 80D) = ₹50,000
- Taxable income = ₹5,50,000
- Tax (Old Regime) = ₹12,500 (approx)
Simple and hassle-free!
⚖️ 6. Common Mistakes to Avoid
❌ Not showing foreign payments — still taxable in India.
❌ Not paying advance tax — leads to 234B/234C interest.
❌ Claiming personal expenses as business ones.
❌ Using wrong ITR form (ITR-1/2 not valid for freelancers).
❌ Ignoring TDS already deducted by clients.
🧩 7. How to Show Foreign Income
If you receive payments from abroad:
- Use FIRC (Foreign Inward Remittance Certificate) as proof.
- Convert income at the SBI TT buying rate on date of receipt.
- Mention details under “Foreign Income – Services Rendered Outside India” if applicable.
📋 8. Tax Saving Tips for Freelancers
💡 Use Section 44ADA – Pay tax on 50% of income, no need to maintain books.
💡 Claim business expenses (internet, software, rent, etc.).
💡 Invest under 80C, 80D, 80G.
💡 Keep all invoices and bank proofs ready for scrutiny.
💡 File return before 31 July 2025 to avoid late fees.
🙋♀️ FAQs
Q1. Can I file ITR-4 if I earn from foreign clients?
Yes, if total receipts ≤ ₹75 lakh and you use presumptive scheme under Sec. 44ADA.
Q2. Can freelancers claim 80C deductions?
Yes, same as salaried individuals.
Q3. What if I receive income from multiple sources (YouTube + freelancing)?
You can show both under business/profession and other income sections.
Q4. Is GST registration required for freelancers?
If annual income > ₹20 lakh (₹10 lakh in special states), GST registration is mandatory.
💡 Key Takeaway
Freelancers must treat their income as business income, maintain records, pay advance tax if required, and file ITR-3 or ITR-4 correctly to stay compliant.
🔗 Suggested Reads
- [GST Reforms 2025: Full List of Changes & Impact Explained]
- [Income Tax Deductions under Chapter VI-A – Simplified Guide]
- [Old vs New Income Tax Regime – Which One Should You Choose?]