Filing taxes as a freelancer is very different from filing as a salaried employee. You don't have a Form 16, and no one is deducting TDS accurately for you. Here is how you calculate your liability.
Step 1: Calculate Gross Receipts
Sum up all the money that hit your bank account from clients during the financial year (April 1 to March 31).
Step 2: Deduct Expenses (or use Section 44ADA)
- Normal Route: Subtract your actual business expenses (software subscriptions, internet, depreciated laptop cost, co-working space rent).
- Section 44ADA Route: If you are an IT professional, consultant, or designer, simply declare 50% of your gross receipts as profit. You don't need expense proofs!
Your Net Profit is your Gross Income.
Step 3: Apply Chapter VI-A Deductions
From your Net Profit, subtract investments made under Section 80C (PPF, ELSS), Section 80D (Health Insurance), etc.
Step 4: Apply the Tax Slabs
Take the final amount and pass it through the New or Old tax regime slabs to find your actual tax liability.
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Quick FAQs
1. What is Advance Tax?
If your total tax liability for the year exceeds ₹10,000, you cannot wait until July to pay it. You must pay it in installments (Advance Tax) throughout the year (June, Sept, Dec, March) to avoid heavy interest penalties under Section 234B and 234C.