Yes, Freelancer is also liable to pay tax in India. Many people don’t like doing a fixed time job and are more acquainted to the flexibility in their working hours. So, these people are termed as Freelancers. Herein we shall discuss about the tax liability of the freelancers or Tax filing for Freelancer.

It’s a known fact that freelancers are the people who work from the comfort of their bed or couch at home, garden or from cool café. But comfort comes with a cost, whatever the reason is freelancers are also liable to pay the taxes to the government for the income they earn, same as business or salary people as per the income tax act. Read our article on How to start a freelancer writing.

What is freelancing income?

Freelancing Income is an income just like other income; one gets hired for a specific assignment and a specific term in which they shall be paid for the work done bythem at the time of completion and submission. The difference being that, the individualis not the company’s employee or on their payroll as he/she has been hired out of the work premises.

Such individuals are not entitled to any perks and benefits of the company.  They are not obliged to punch at the exact time. In fact, one can finish the work at from any corner of your choice. According to the Income Tax Act, any income that is earned by displaying your intellectual or manual skills is income from a profession.  This income will be taxed as “Profits and Gains from Business or Profession”.

The Gross Income will be aggregate of all receipts they get in the course of carrying out the profession. The bank account statement is a documentary source on which one can solely depend for the information because all the professional income flows through one’s personal banking channel apart from cash remittances.


Freelancers while doing their jobs incur expenses in course of their business activities or rendering services. These can deducted as an expense from their income.  This amount spent could be anything from office furniture to cab fare to visit the clients. To get the deductions, the expenses incurredmust be directly related to the job individualis doing.


Expenses claimed as a deduction FROM freelancing income:

  • The expenses are solely for the purpose of freelancing work
  • Spent fully and exclusively for the purpose of the work
  • Incurred during the tax year
  • Are not related to the capital expenditure or a personal expenditure of the freelancer
  • Not prohibited by law or offence

Expenses claimed as a deduction AGAINST the income:

  • If you take property on rent while carrying on work then the paid rent will be deducted as a deduction.
  • Any repairs to the rented property then the repair cost will be deducted as a deduction.
  • Purchased a capital asset for their work then you can depreciate expense as depreciation and treat that as a deduction.
  • Expenses that are carried out as work such as purchasing a printer, office supplies, your monthly telephone bill, internet bills or conveyance expenses.
  • If one pays any expenses that are carried to meet the clients within or outside of India is allowed as deduction.
  • Any expenses that are carried out to meet the clients or take your clients out for dinner or some other outing and money has been solely depending upon the intention of getting new business or retaining existing business
  • Paid local taxes and insurance for own business property
  • Domain registration, apps purchased to test the product are also allowed as expense.



One can use the deductions under section 80C of the Income Tax Act, to save the tax. It offers tax relief on certain expenses and also encourages the taxpayers to save for the future.

Net taxable income= Gross Taxable Income- Deductions

When you earn from your intellectual or manual skill, your income is calculated as qualified as profit& gain of business and profession. From a tax point of view, you have to treat yourself as a business person. Like- you have the clients like the way a business or customer has and you have to pay taxes on the income earned from different clients.


Every professional service that is served by you is subject to 10% tax deducted from source. Freelancers are also eligible to claim the TDS refund as well, just like any other individual or your salaried friend does.


Freelancers or Consultant are required to fill out and submit the ITR-4 and section 194J under the Income Tax Act.  The Income Tax Act mandates the TDS deduction from the payment made for professional services.  However, the professionals can opt for presumptive taxation and declare 50% of their gross receipt as their income by Filing the ITR-4.

Salaried Individuals feels very easy when it comes to file the Income Tax Return as compare to freelancers.  With salary individuals, they are alerted or advised by the company HR to file return or save tax. But, for freelancers and consultants, it is a tough call as filing the taxes can be a more complicated process.  The freelancers are not bound with one client they have a number of clients so it is difficult for the freelancer to do such tax filing.

Freelancer from a tax purview

When you can earn from a manual skill or intellectual, your income is qualified as Profits&Gain of Business& Profession. From a tax point of view, freelancer is a professional or business person.

Like a professional or business owner, the freelancers do have clients the way a business has a customer and you have to pay taxes on the income earned from different clients.


Earlier, VAT and Service Tax were the taxes that were applied to freelancers. But, now the tax has been replaced by GST. GST means the tax applied on the goods or service rendered by an individual. Hence, freelancingalso comes under the purview of service. 18% of GST applies to most services, thus it shall apply to freelancing as well.

Points to be noted under GST for Freelancers

  • If the total income from freelancing work exceeds Rs 20 lakhs, then GST will be applied as on the other GST taxpayer.
  • You should be eligible for composition scheme, in case you sell goods
  • In the case of services, the composition scheme does not apply. However, you can provide interstate supply up to the limit of Rs 20 lakh without registering under GST.
  • Your invoice must be from GST complaint.

Therefore, a freelancer is also liable to pay taxes in India. He is like any other professional using his individual skills/application of knowledge to render services to his clients. Thus, he too needs to abide by laws in place.