Self-employed professionals enjoy the freedom of managing their schedules, away from the constraints of a 9-to-5 job. They often juggle multiple roles, from managing clients and projects to handling their business finances and marketing.
Despite their independence, self-employed individuals share a common responsibility with salaried employees i.e. filing income tax returns. However, this process can be more complex and time-consuming for them.
DSC for income tax simplifies this task by providing a secure, electronic way to sign documents and submit returns online. It ensures authenticity and enhances the efficiency of filing income tax returns, simplifying the entire process for individuals and professionals.
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Who are Self-Employed Professionals?
Self-employed professionals work for themselves, managing their own business or practice instead of working for an employer. These are:
Actors: Actors work freelance, taking on roles in films, TV shows, or theatre productions based on contracts or auditions.
Lawyers: Lawyers can operate their law firms, offering legal services to clients on a case-by-case basis.
Writers: Writers work independently, creating content for books, blogs, articles, or other publications, often managing their deadlines and projects.
Traders: Traders buy and sell financial assets like stocks or commodities independently, without company employment.
Consultants: Consultants provide expert advice in specific fields, such as business, marketing, or technology, and usually work with clients on short or long-term projects.
Freelancers: Freelancers offer various services, such as graphic design, programming, or photography, and work with multiple clients based on agreements or projects.
Artists: Artists work independently, creating paintings, sculptures, or other art forms. They sell them through galleries, exhibitions, or online platforms.
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Is Freelance Taxable Income?
Yes, freelance income is taxable. Freelancers must report their earnings to the tax authorities. They'll need to pay taxes based on income level, including self-employment tax for Social Security and Medicare. They should keep track of their income and expenses to calculate their taxes.
Yes, freelance income is taxable in India. Freelancers must report their earnings to the Income Tax Department and pay taxes accordingly. Freelance income is considered "business or professional income," and freelancers pay income tax based on their total earnings.
Additionally, freelancers may need to pay GST if their annual turnover exceeds the prescribed limit. It is important to maintain accurate records of income and expenses for tax calculation.
Freelancers need a
Best Digital Signature Certificate (DSC) to simplify their income tax filing process. It's a smart solution to save time, secure transactions, and meet mandatory requirements for professionals above certain income levels.
Income Tax Slab for Self-Employed
Below is the income tax slab for freelancers, business professionals, and others:
- Up to ₹3 Lakhs: No tax is applied.
- ₹3 Lakhs to ₹6 Lakhs: A 5% tax is applied on the amount exceeding ₹3 Lakhs.
- ₹6 Lakhs to ₹9 Lakhs: A base tax of ₹15,000 is levied, plus 10% on the income exceeding ₹6 Lakhs.
- ₹9 Lakhs to ₹12 Lakhs: A base tax of ₹45,000 is levied, plus 15% on the income exceeding ₹9 Lakhs.
- ₹12 Lakhs to ₹15 Lakhs: A base tax of ₹90,000 is levied, plus 20% on the income exceeding ₹12 Lakhs.
- Above ₹15 Lakhs: A base tax of ₹1,50,000 is levied, plus 30% on the income exceeding ₹15 Lakhs.
Note: This new income tax regime is exclusively for self-employed individuals and professionals under 60 years.You need a DSC certificate to submit documents and file returns on time. Don't wait! Get DSC for income tax now to file all your ITRs quickly and securely from the portal.
Which ITR is for Self-Employed India?
Self-employed individuals must file their Income Tax Returns (ITR) in India, using a specific form based on their income and business type. The most common ITR forms for self-employed individuals are ITR-3 and ITR-4.
ITR-3 is for individuals who earn income from a profession or business. This form applies to freelancers, consultants, and professionals like doctors, lawyers, and accountants.
If you are self-employed and maintain books of accounts, or your income exceeds the threshold limit for audit, you should use ITR-3.
ITR-4, also known as the Sugam form, is for self-employed individuals whose income comes from a business or profession but meets specific conditions. It is designed for individuals who opt for the presumptive taxation scheme under sections 44AD, 44AE, or 44ADA.
Thus, these schemes help simplify the tax filing process for small businesses by offering a fixed percentage of income as taxable, based on the turnover.
DSC for Income Tax is required to file your tax returns online. Buy Capricorn DSC for secure submissions and an efficient e-filing process.
How to Save Tax on Freelance Income?
Deduct Expenses: Freelancers can deduct business-related expenses to reduce their taxable income. Keep proper records and invoices for these expenses including:
- Office rent or utilities
- Internet and phone bills
- Software subscriptions and tools
- Travel expenses for work
- Marketing and advertising costs
Claim Deductions Under Section 80C: Section 80C allows you to claim up to ₹1.5 lakh deduction. Some common investments that qualify for this deduction are:
- Life Insurance Premiums
- Employee Provident Fund (EPF)
- Public Provident Fund (PPF)
- National Savings Certificates (NSC)
- Tax-saving Fixed Deposits (FD)
Additionally, you can also claim deductions for premiums paid on health insurance under Section 80D. The maximum deduction you can claim is ₹25,000 for individuals and ₹50,000 for senior citizens.
Use Tax Consultants for Better Planning: Tax laws can be complicated, especially for freelancers. It's a good idea to consult a tax expert who can help you optimize your tax planning and ensure you're claiming all available deductions.
If you're a tax consultant or CA filing returns for multiple clients, directors, and others, having a DSC signature is important. DSC for income tax not only ensures secure tax return submission but also adds credibility to your services.
Conclusion
DSC for income tax is important for self-employed professionals to make their income tax filing easier and more secure. It allows them to sign documents electronically, ensuring authenticity and reducing fraud risks. DSC for income tax is essential for professionals to focus on their business instead of worrying about paperwork.