Most freelancers spend a lot of time thinking about the work, the projects, the clients, the invoices. The taxes tend to get figured out in a rush, usually in July, usually with some version of “I’ll just file what I filed last year.”
The problem is that freelance taxation has more moving parts than most people realise. How you structure your income, which scheme you file under, and what you choose to deduct can make a meaningful difference to what you actually owe or don’t owe.
And the Budget 2025 changes made this more relevant than before. There are legitimate ways for freelancers to reduce their tax burden significantly, but they come with conditions, trade-offs, and a few things worth understanding before you decide.
We’ve handpicked threads on these topics in today’s edition.
TOP THREADS
Can a freelancer earning ₹24 lakh really pay zero income tax?
A freelance graphic designer recently came across Budget 2025 updates and heard that professionals can pay zero tax on ₹24 lakh in income. The short answer is yes — but only under specific conditions. It comes down to how the presumptive taxation scheme interacts with the revised Section 87A rebate, and which professions actually…Continue Reading →
What is the presumptive taxation scheme, and is it right for you?
The presumptive scheme was designed to simplify tax filing for small businesses and professionals — no detailed books, no audit, just a fixed percentage of your turnover declared as profit. But there’s a catch that most people only discover after they’ve opted in: once you’re in, getting out isn’t…Continue Reading →
Which expenses can you deduct as a freelancer?
Freelance income falls under ‘income from business or profession’, which means you can reduce your taxable income by claiming work-related expenses — internet bills, software, travel, depreciation on your laptop, even upskilling costs. The list is longer than most people expect. But whether you can claim any of it at all depends on one decision you may have already…Continue Reading →
FAQs
Q: If I opt for the presumptive scheme this year, can I switch back to regular filing next year?
A: For businesses under Section 44AD, no — not easily. If you opt out of the scheme, you cannot return to it for the next 5 financial years, and you’ll need a tax audit during that period. For professionals under Section 44ADA, if you want to declare less than 50% of your receipts as profit, you must opt out and maintain books of accounts. A tax audit is also required if your total income exceeds the basic exemption limit.
Q: Can I claim my laptop, software subscriptions, and internet bill as deductions?
A: Yes, if you are filing under the regular (non-presumptive) route. Freelancers can deduct expenses that are wholly related to earning their income — internet and phone bills (proportionate if shared with personal use), software and tool subscriptions, travel for work, upskilling costs, and depreciation on assets like a laptop. However, if you opt for the presumptive scheme, none of these can be separately claimed — the fixed percentage already stands in for all expenses.
Q: What is the turnover limit to use Section 44ADA?
A: Your gross receipts must not exceed ₹75 lakh in a financial year. This higher limit applies only if cash receipts are 5% or less of your total receipts. If cash transactions exceed 5%, the older limit of ₹50 lakh applies. If your receipts cross ₹75 lakh in any year, you cannot file under 44ADA and your income will be treated as regular business or professional income.