Filing ITR for Salaried + Freelance Income: A Step-by-Step Guide with TaxBuddy
- Bhavika Rajput
- 6 hours ago
- 9 min read
Filing Income Tax Returns (ITR) when you have both salaried and freelance income can often feel like navigating a complex maze. Balancing multiple income sources requires accurate documentation, an understanding of tax regulations, and the ability to determine the correct forms. However, leveraging platforms like TaxBuddy makes the entire process manageable and efficient. For the financial year 2024–25 (Assessment Year 2025–26), TaxBuddy simplifies tax filing, ensuring that you meet all compliance requirements while maximizing tax savings.
Let us explore each essential step, from gathering your financial documents to selecting the appropriate ITR form, ensuring your tax filing process is seamless. With the help of AI-powered tools, TaxBuddy takes care of much of the work, automatically filling in key details, suggesting deductions, and minimizing the potential for errors.
Table of Contents
Understanding the ITR Form for Salaried + Freelance Income
When filing an Income Tax Return (ITR) for both salaried and freelance income, it’s crucial to understand which ITR form applies to your situation. For individuals earning both salary and freelance income, there are two key forms to consider:
ITR-3: This form is typically used by individuals who earn income from salary and have freelance or professional income. It is applicable to individuals or Hindu Undivided Families (HUFs) who have business or professional income but are not eligible for the presumptive taxation scheme under Section 44ADA.
ITR-4: If you qualify for the presumptive taxation scheme under Section 44ADA, you can file ITR-4. This scheme applies if your gross receipts from freelance work do not exceed ₹75 lakh, and it simplifies the process by allowing you to report a fixed percentage (50%) of your freelance receipts as income. No need to maintain books of account or elaborate expense documentation.
TaxBuddy helps determine which form you need based on your income profile. It pre-fills details from Form 16 and other documents to ensure accuracy and streamline the process.
Documents You Need to Collect for Filing
Gathering the right documents is the first step to ensure a smooth and accurate tax filing process. Below are the essential documents you need for both salaried and freelance income:
Form 16: Issued by your employer, this document outlines your salary, the tax deducted at source (TDS), and other deductions.
Form 26AS: This consolidated tax statement includes TDS details, advance tax payments, and any other tax-related information.
Form 16A: If you're freelancing, this form includes TDS deducted on professional or freelance payments.
Bank Statements: These will include your salary receipts and freelance payments. Make sure to keep statements that reflect all sources of income.
Invoices for Freelance Work: These show the income you earned from your freelance services.
GST Returns (if registered): If you're a GST-registered freelancer, your GST returns and invoices will also be required.
Deductions Details: Details for deductions under sections like 80C (for investments like PPF, EPF), 80D (for insurance premiums), 80E (for education loan), etc.
Advance Tax Payments: If you’ve made any advance tax payments, include receipts and documents related to them.
TaxBuddy makes the process of collecting these documents simpler by allowing you to upload them directly to the platform. The AI-powered tool will auto-fill relevant data, saving you time and reducing the chances of error.
Getting Started with TaxBuddy for ITR Filing
Getting started with TaxBuddy is straightforward and designed for ease. Here’s how you can begin:
Sign Up/Login: Start by creating a free account on TaxBuddy. You can either use the website or download the mobile app.
Select Your Filing Plan: Once you’re logged in, select the appropriate plan for Salaried + Freelance ITR Filing. TaxBuddy will automatically detect the type of ITR form you need based on your income profile.
Upload Documents: Upload your Form 16, invoices, bank statements, and any other relevant documents. TaxBuddy’s AI will auto-fill your salary details, TDS, and primary expenses. For freelance income, you’ll be asked to manually input the amount received and any business expenses.
Review & Submit: After uploading, TaxBuddy will generate a preview of your tax return. You can review the information, make edits, and finalize your submission.
TaxBuddy makes the process intuitive, ensuring you don’t miss any important information while filing your return.
Step-by-Step Filing Process with TaxBuddy
TaxBuddy simplifies the filing process by breaking it down into clear steps. Here’s what you can expect:
Income Details:
Salary Details: Confirm the pre-filled salary details (from Form 16 or Form 26AS). Ensure they match your income records.
Freelance Income: Add freelance income based on the invoices and bank statements. TaxBuddy helps categorize this income correctly under the “business/professional” section.
Presumptive Taxation Scheme: If eligible, TaxBuddy will suggest the presumptive taxation scheme under Section 44ADA, automatically applying a fixed percentage for taxable income.
Business Expenses/Allowable Deductions:
Enter freelance business expenses like rent, internet, travel, or depreciation. TaxBuddy automatically calculates the allowable deductions per Income Tax rules.
Tax Deducted at Source (TDS):
TaxBuddy will automatically pull in TDS data from Form 16 and Form 16A. You’ll need to verify if the amounts are correct.
Investments & Deductions:
Input investments under Section 80C (e.g., PPF, life insurance), 80D (insurance premiums), and other eligible deductions (e.g., NPS, donations).
TaxBuddy suggests the best deductions based on your entered data.
Tax Computation & Liability:
TaxBuddy calculates your total tax liability, factoring in the tax regime (old or new) you opt for.
It will show if you need to pay additional tax, and guide you through the process of paying it online.
Preview & Review:
You can instantly preview the final ITR form to check for accuracy, potential errors, or missed details.
Expert Assistance (Optional):
If your filing is complex (e.g., foreign income, large freelance turnover), TaxBuddy offers the option to engage a CA for review or expert-assisted filing.
e-Filing & Verification:
Once everything is verified, TaxBuddy files your return through the official e-filing system. You can complete the e-verification using Aadhaar OTP or net banking.
Track Refunds & Notices:
After submission, TaxBuddy tracks your ITR status and refund progress. If you receive any notices from the Income Tax Department, TaxBuddy provides free assistance in managing them.
Updates for the 2025 Filing Season You Need to Know
For the financial year 2024-25 (Assessment Year 2025-26), there are some key changes to be aware of:
New Tax Regime:
The new tax regime has a progressive slab structure with a full rebate on income up to ₹7 lakh. Standard deductions continue, and there are no exemptions on HRA, home loan interest, etc.
Tax rates for the new regime are as follows:
Income up to ₹3 lakh: Nil
₹3,00,001–₹7 lakh: 5%
₹7 lakh to ₹10 lakh: 10%
₹10 lakh to ₹12 lakh: 15%
₹12 lakh to ₹15 lakh: 20%
Above ₹15 lakh: 30%
ITR-3 & ITR-4 Updates:
More detailed reporting of capital gains and professional receipts is now required.
Income needs to be segregated pre/post July 23, 2024, for new Long-Term Capital Gains (LTCG) rules.
Higher disclosure requirements for interest, foreign assets, and income.
Penalty for Late Filing:
After September 15, 2025, a late filing penalty of up to ₹5,000 will apply for individuals who miss the deadline.
Revised ITR Forms:
The forms now require more detailed disclosures for certain income categories, like interest income, capital gains, and foreign income.
Pro Tips for Efficient and Accurate ITR Filing
Double-Check Your Documents:
Ensure all TDS certificates, Form 16, and Form 26AS are correctly reflected in your filing. Discrepancies can lead to delays or notices from the Income Tax Department.
Use AI Assistance:
TaxBuddy's AI suggests deductions you might miss, helping maximize your savings and reduce tax liability.
Review Before Submission:
Always review your pre-filled data, especially freelance income and business expenses, to avoid errors.
Opt for Expert Assistance If Necessary:
If you have complex freelance income or foreign assets, consider engaging a CA for assistance, which is available through TaxBuddy.
File On Time:
Filing before the deadline avoids penalties and ensures a smooth refund process.
Conclusion
Filing taxes for both salaried and freelance income can initially seem overwhelming, but with the right tools, the process becomes significantly simpler. TaxBuddy, with its AI-powered platform, offers a streamlined, accurate, and user-friendly way to manage your tax filing, ensuring all income sources and deductions are accounted for. It takes the guesswork out of the process, guiding you through each step—from selecting the correct ITR form to finalizing your return. Whether you’re filing as a salaried employee with side income or running your own freelance business, TaxBuddy’s intuitive platform ensures compliance and maximizes potential savings.
If you're looking for a hassle-free tax filing experience with minimal stress, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and seamless process. With its comprehensive assistance, you can file with confidence, knowing every aspect of your taxes is in order.
FAQs:
Q1. What is the difference between ITR-3 and ITR-4 for freelancers and salaried individuals?
ITR-3 is used when you have both salaried income and freelance income, requiring detailed reporting of income and expenses. It is designed for individuals earning income from a profession or business and needing to maintain accounts. On the other hand, ITR-4 is a simpler form used if you're eligible for the presumptive taxation scheme under Section 44ADA. It’s available to freelancers with gross receipts up to ₹75 lakh, simplifying your tax calculation by allowing you to report a fixed percentage of your income.
Q2. Can I claim deductions for both salary and freelance income under ITR-3?
Yes, you can claim deductions for both salaried and freelance income under ITR-3. For your salaried income, you can claim deductions like HRA (House Rent Allowance), 80C (investments in PPF, life insurance, etc.), 80D (health insurance), and others. For your freelance income, you can claim business-related expenses such as rent, office supplies, internet charges, travel expenses, and depreciation. TaxBuddy helps you maximize these deductions by automatically suggesting the most beneficial options based on your profile.
Q3. How can I ensure my freelance income is accurately reported for tax purposes?
To accurately report freelance income, gather all invoices and payment records from your clients, along with bank statements showing your freelance earnings. If you are under the presumptive taxation scheme (Section 44ADA), TaxBuddy will automatically calculate your taxable income by taking a fixed percentage of your gross receipts. For other freelancers not under the scheme, you will need to manually input your income and business expenses.
Q4. What are the key documents required to file taxes with both salaried and freelance income?
The key documents you’ll need include:
Form 16 (from your employer) for salaried income details.
Form 26AS for TDS and tax payments.
Bank statements showing both salary and freelance income.
Freelance invoices and receipts for services rendered.
Business expense records for freelancing.
Proof of deductions such as 80C, 80D, and 80E.
Q5. Can TaxBuddy help me file my taxes if I have multiple sources of freelance income?
Absolutely! TaxBuddy is designed to handle multiple income streams, including freelance work. You can add income from various clients and categorize it accordingly. It ensures all your freelance earnings are accurately reported, and it suggests relevant business deductions based on your expenses.
Q6. How does TaxBuddy ensure my freelance deductions are maximized?
TaxBuddy automatically calculates your eligible deductions based on your inputs, such as business expenses related to your freelance work. It also suggests the best possible tax-saving options under sections like 80C, 80D, and others, ensuring you don’t miss out on any potential savings.
Q7. What is the presumptive taxation scheme under Section 44ADA, and how does it affect my filing?
The presumptive taxation scheme under Section 44ADA is designed for freelancers with gross receipts of up to ₹75 lakh. Instead of maintaining books of accounts, you can claim 50% of your total receipts as taxable income. TaxBuddy helps you determine if you are eligible for this scheme and applies it automatically when filing your return, reducing the paperwork and complexity of reporting expenses.
Q8. How does TaxBuddy calculate my total tax liability under the old vs. new tax regimes?
TaxBuddy compares both the old and new tax regimes and calculates your tax liability under each to help you choose the one that offers the most tax benefit. The new regime offers lower tax rates but doesn’t allow exemptions or deductions, while the old regime allows for deductions but has higher tax rates. TaxBuddy ensures you select the most beneficial option.
Q9. What should I do if I receive a notice from the Income Tax Department after filing my ITR?
If you receive a notice, don’t panic. TaxBuddy provides free post-filing support to guide you through any notices or queries raised by the Income Tax Department. You can also track the status of your ITR and refunds directly through the TaxBuddy platform.
Q10. How do I e-verify my ITR after filing it with TaxBuddy?
After you file your ITR through TaxBuddy, the platform will prompt you to complete the e-verification process. You can e-verify your return using Aadhaar OTP, net banking, or bank EVC (Electronic Verification Code). This step is essential to validate your return and avoid any delays.
Q11. Can I file my ITR after the deadline using TaxBuddy?
Yes, TaxBuddy allows you to file a belated return after the deadline. However, you may be subject to a penalty of up to ₹5,000, depending on when you file. Filing a belated return as soon as possible is advisable to minimize penalties and interest.
Q12. What is the difference between self-filing and expert-assisted filing with TaxBuddy?
Self-filing is ideal for individuals with straightforward income and deductions. TaxBuddy’s AI guides you through the process, auto-filling your data and ensuring accuracy. Expert-assisted filing is recommended for individuals with complex returns, such as those with international income, capital gains, or large freelance turnovers. You can access a TaxBuddy CA for review and expert advice, ensuring complete accuracy.
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