Hello Readers!
Our work culture is changing. At many places and in many offices, employees are working from their home, in the context to save themselves from the COVID-19, people are avoiding crowded places like office. Many people who lost their job, have now started a kind of freelancing so they can continue their work from home.
We all know that economy is rising in its contribution to GDP across the globe. People who have started freelancing or are doing freelancing, they have restructured and shifted their employment shifts to working for yourself rather than working for the company. However, still they are still liable to pay tax, on time.
If you are also working as a freelancer and confused about what you can claim to deduct and expense before arriving at your tax payable figure, then here are some points that might help you do that.
Ensure What You Get as Income Include TDS
Do raise an invoice for the work or service you provide and present this invoice to the entity you have contracted with. When your invoice is in consideration ensure that the amount paid to you is net of TDS or tax deducted at source. The IT department of the company ties all your income including TDS by linking it to your PAN number.
The amount you receive is relevant to your final income at the end of the year and you have to arrive at the additional tax payable or refund due.
Estimate your annual tax payable by adjusting for TDS and if it exceeds more than Rs 10,000, then you need to pay Advance Tax, equal to that amount. This advance tax is payable before the 15th of March in a given financial year, and in case if you miss doing so, you might have to pay penalties.
Expenses Can Be Deducted from Your Freelancing Income
You can go deducting some of the expenses from your freelancing income and then calculate your tax payable. Only you need to ensure that these expenses are related to your work like rent, travel expenses, office expenses, and so on. You can deduct these expenses from your income before you calculate the tax payable.
Tax Saving Ailments Under Section 80C
For corporate employees and freelancers, there is no employees provident fund amount which can get deducted under this section. However, there are some other tax-saving ailments under Section 80C like equity-linked savings schemes, public provident fund contribution, life insurance premium, the amount paid as school fees for your children, etc., that are eligible for deduction before you calculate your tax payable. Freelancers are also allowed to deduct medical insurance premiums from their taxable income. After the deductions, what’s left is their taxable income.
If you are working as a freelancer then these are the points you need to observe and apply to your freelancing income before you calculate the tax payable on your income.
For any kind of query, you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.
Happy Investing!
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