Freelance along with a job? You can still claim ₹50,000 standard deduction

Income tax rules differ greatly for freelancers and salaried professionals. So, for the purpose of filing your Income Tax Return (ITR), what do you do when you have a full time job and become independent in a financial year?

As you are ready to file your ITR, we answer three important questions related to freelance income tax filing.

Which form should I fill?

Freelancers can file their ITR only through Form 3 or Form 4, whereas income from salary has to be filed in ITR-1 or ITR-2. In this case, freelance income is preferred and the ITR form should be chosen accordingly.

“In ITR-1, one cannot disclose independent income. even if there is ₹Karan Batra, Founder, CharteredClub.com said, “No. 1 of the freelance income has to be declared in ITR-3 or ITR-4.”

Can I claim standard deduction? ₹50,000 available only for salaried professionals?

Freelancers cannot claim the standard deduction ₹50,000 is available for a salaried person. However, if you have worked a full-time job, you can claim the standard deduction for salary income.

“One can still claim standard deduction from his salary component. Even if someone has done a job for one month in a financial year, they can still claim the full amount ₹50,000,” Batra said.

There are two separate income heads for Salary and Independent Income in ITR-3 and ITR-4. “Under the pay head, a person can declare and claim salary income” ₹50,000 deduction,” Batra said.

Taxpayers can also claim the expenses incurred on their work during freelancing so as to reduce the tax outgo under the freelance head.

Is deduction under section 80C to 80U available to me if I opt for the presumptive income scheme?

Yes, you can still claim deduction on PPF, Mediclaim, ELSS etc. under Chapter IVA even if you offer income for taxation on presumptive basis under section 44AD.