Being a freelancer offers many benefits in the form of work freedom, non-dependence of salary, better finance management as well as flexibility. But then, in order to maintain this stability, it is necessary to file yearly income tax as well as ITR that has its own importance in the financial arena.
However, there are certain tips and factors which a freelancer must keep in mind while filing his/her income tax return. Take a look:
Calculate Your Income:
Start with calculating your yearly income first. Compute all the freelance money you have earned in a year starting from April to March. Keep in mind that the total value must not include money from any other sources which are not included under the freelance work.
Deduct Extra Expenses
For freelancers, here is an important deduction which is prescribed as per the IT law. You have the freedom to deduct all the extra expenses which occurred during the work in a year. This can be your electricity bill, phone bill, travel expenses etc. Also, if you are paying rental of co-working space from where you are performing the work, then you can file it during ITR submission time.
Other Tax Deductions
You can also deduct other expenses borne during the year such as a computer, mobiles, camera, laptop etc. Apart from this, a freelancer can also claim tax deductions under section 80c of the Income Tax Act. Maintain all your finances on paper or digitally so as to avoid last minute hassle.
Know your TDS
Many clients also deduct TDS (Tax Deduction at Source) for the work they give it to you. All you have to do is to keep those papers with yourself and file in all the detail at the time of Filling ITR.
Fill Up the Right Form
Many a time, a freelancer gets confused that which ITR form they have to submit. So to reduce this confusion, a freelancer needs the ITR 4/4S form. In case your income is less than 2.5 LPA, then you don’t need to file income tax. Rest of the slab is the same as that of a general taxpayer.