The deadline to file income tax return is just two weeks away. After that you will have to pay a fine for filing income tax return. This is the reason that as the deadline is getting closer, the number of return filers is increasing rapidly. Many people rely on CAs to file income tax returns because they are not able to file returns on their own. Although filing income tax return is very easy for all taxpayers.
The process is different from salaried
The process of filing ITR is the easiest for salaried people. They do not have to do much headache in filing the returns. However, in recent times, there has been an increase in the number of people who prefer to work as freelancers or consultants instead of regular jobs. After Kovid, this type of work culture has spread rapidly in India. The process of filing income tax return is different for such people. If you have also worked as a freelancer or consultant, then we are going to help you in filling ITR.
Standard deduction will not be available
Let us go ahead with some basics. If you are a freelancer or a consultant, you cannot file ITR-1 or ITR-2 like a salaried taxpayer. You will also not get the benefit of standard deduction of Rs 50,000, because your income is not from salary. You can definitely claim some other deductions according to your expenses.
Which tax regime to choose
First of all, income tax slab and rate. Your slab will be decided according to the amount you earned during the whole year as a freelance or consultant and tax rate will be applicable accordingly. You cannot choose tax regime every year like salaried people. Think of it like this. Old tax regime is the default option for the financial year 2022-23 i.e. the current assessment year, but you can also choose the new tax regime. However, if you have opted for the new tax regime, then you will not get the option to change it, as salaried people get. The new tax regime is going to be the default from this financial year.
What is the presumptive taxation scheme?
Freelancers and consultants get the facility to opt for the presumptive taxation scheme under the Income Tax Act. . Consultants earning money from business or profession can opt for the presumptive scheme under section 44ADA of the Income Tax Act. This scheme is only for those professionals who have not received more than Rs 50 lakh during 2022-23. From next year this millit will increase to Rs 75 lakh. Such professional can show 50% of total receipts as business income and tax will be calculated accordingly.
When will not get the benefit of presumptive scheme?
If the income of the consultant 50 lakhs, then they can avail the benefit of the presumptive scheme under 44AD. In this, the limit of total receipts is Rs 2 crore at present, which will be increased to Rs 3 crore from the next time. However, if the income is from commission, brokerage or agency business, then it cannot be availed.
When is the deadline for freelancer?
Like a normal taxpayer, for consultant and freelancer Also the deadline for filing income tax return is 31 July 2023. However, if the consultant comes under the purview of audit under section 44AB, then the deadline for that is 31 October 2023. In these cases, the consultant will need to submit the tax audit report by 30 September 2023.
Which form will be used to file ITR?
Consultant with professional income will have to file ITR-3 form . However, if you are opting for the presumptive scheme, then ITR-4 i.e. easy form will have to be filled. If the income is more than Rs 50 lakh or the loss is to be carried forward, then only ITR-3 form has to be filled. The option to show profit, loss and balance sheet has been given in this form.
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