Filing ITR for Freelancers Who Also Have Salary Income
- Rajesh Kumar Kar
- Jul 29
- 9 min read
Filing Income Tax Returns (ITR) can often seem daunting, especially for individuals with multiple income streams such as a salary and freelance income. The process of filing taxes becomes even more complex when understanding how to report these diverse sources correctly. For freelancers with a regular salary, it’s essential to know the correct ITR form to use, how to calculate taxes, and how to report both salary and freelance income accurately. Let us understand the complexities of filing ITR when you earn both a salary and freelance income, ensuring that you meet all compliance requirements and avoid penalties.
Table of Contents
Understanding Salary + Freelance Income
When you have both salary income and freelance income, the tax filing process involves combining these two sources of income and ensuring that they are reported accurately in your ITR. Salary income is typically reported in Form 16, which is provided by your employer, and it is subject to standard tax deductions. On the other hand, freelance income is considered as business or professional income and is subject to different rules, including the eligibility for various deductions such as business expenses, travel costs, and professional tools.
The first step in filing is to properly calculate both your salary income and freelance income. While salary income is straightforward, freelance income requires a little more attention, particularly when it comes to tracking expenses, declaring profits, and handling the appropriate tax slabs. Understanding how to report both streams correctly is crucial to ensure that you are not overpaying or underpaying taxes.
Which ITR Form Should You Use?
The right ITR form depends on the type of income you receive. As a person earning both salary and freelance income, the form you use must accommodate both income sources.
ITR-1 (Sahaj): This form is typically used by salaried individuals with income from salary, one house property, and other sources like interest income. However, freelancers with income from business or profession cannot use this form.
ITR-3: This is the most appropriate form for individuals with income from salary and freelance work. ITR-3 is specifically designed for individuals or Hindu Undivided Families (HUFs) who have income from a profession or business along with salary or pension income. If you are a freelancer, this is the form you’ll likely need, as it allows you to report income from business or profession, including the various deductions related to freelance work.
Tax Slabs, Schemes, and What to Consider
When filing taxes, it’s essential to understand which tax slabs apply to you and the various tax schemes available, as they can significantly impact the amount of tax you owe. The tax slabs for the financial year 2024-25 (Assessment Year 2025-26) are as follows:
For individuals below 60 years of age:
Income up to ₹2.5 lakh: Nil
₹2.5 lakh to ₹5 lakh: 5%
₹5 lakh to ₹10 lakh: 20%
Above ₹10 lakh: 30%
For senior citizens (aged 60 years or more but less than 80 years):
Income up to ₹3 lakh: Nil
₹3 lakh to ₹5 lakh: 5%
₹5 lakh to ₹10 lakh: 20%
Above ₹10 lakh: 30%
For super senior citizens (80 years or more):
Income up to ₹5 lakh: Nil
₹5 lakh to ₹10 lakh: 20%
Above ₹10 lakh: 30%
Additionally, the new tax regime offers lower tax rates but does not allow exemptions and deductions like the old tax regime. It's crucial to evaluate both regimes before filing your return to choose the one that benefits you the most. If you claim deductions such as 80C (for investments) or 80D (for insurance premiums), the old tax regime might be more advantageous.
Step-by-Step ITR Filing Process for Freelancers with Salary Income
Gather Documents: Begin by gathering all necessary documents. For salary income, this will include your Form 16 provided by your employer. For freelance income, keep track of all invoices, receipts, and any expenses incurred while working. Additionally, maintain records of any advance tax paid during the year.
Choose the Right ITR Form: If you are filing income from salary and freelance work, you will need to fill out ITR-3. Ensure that you have the correct form before starting the filing process.
Calculate Your Income: Add up your salary income from Form 16, and then calculate your freelance income. This will include total payments received minus any business expenses you can claim. Freelancers can deduct expenses such as office rent, internet bills, professional fees, travel costs, and depreciation on assets used for business.
Fill Out the Form: Start filling out the ITR form with all required details. In the income section, report your salary under the appropriate section, and for freelance income, report it as business income. Be sure to enter any deductions under sections like 80C, 80D, or 80G, depending on your situation.
Calculate and Pay Tax: Based on your total income, calculate your tax liability. If you’ve already paid advance tax, include those payments in your filing. If there’s any outstanding tax to be paid, make the necessary payment before submitting your return.
File the Return: Once all details are filled, verify your return and submit it online. Don’t forget to e-verify your return through methods like OTP, Aadhaar, or net banking.
Due Date for Filing ITR (AY 2025-26)
For taxpayers filing for the Assessment Year 2025-26, the due date for filing returns is September 15, 2025 for individuals without audit requirements. For businesses or freelancers that require audits, the deadline is October 31, 2025. It’s crucial to adhere to these deadlines to avoid penalties and interest. Filing early is always recommended to ensure that your return is processed without delays, and any refund is received promptly.
Common Mistakes and Compliance Tips
Incorrect Form Selection: Ensure you are using the correct ITR form. Using ITR-1 for a freelancer with salary income is a common mistake.
Missed Deductions: Freelancers often forget to claim legitimate business expenses like internet bills, professional fees, or office equipment. Keep accurate records to ensure you claim all deductions you’re entitled to.
Advance Tax Payment: Many freelancers fail to pay advance tax in quarterly installments, which can lead to interest and penalties. Make sure to estimate your tax liability in advance and pay taxes as required.
Mismatch of Income: Ensure that the income from both salary and freelancing is reported accurately. Any discrepancies in income reporting could delay your refund or trigger an audit.
Conclusion
Filing taxes with both salary and freelance income can be complex, but with the right knowledge, the process becomes much easier. It’s important to choose the right ITR form, understand the applicable tax slabs and deductions, and carefully follow the step-by-step filing process to ensure accuracy and compliance. Freelancers must be diligent in calculating their business expenses and taxes owed. The due date for filing returns for AY 2025-26 is September 15, 2025, and it’s essential to file on time to avoid penalties and interest. By following the right approach and using platforms likeTaxBuddy mobile app, freelancers with salary income can navigate the filing process efficiently.
Frequently Asked Question (FAQs)
Q1: Which ITR form should freelancers with salary income use?
Freelancers with salary income should file ITR-3. This form is designed for individuals who earn income from both salary and business/profession. Freelancers typically report their freelance income as business income, and ITR-3 includes sections for income from business or profession along with salary income. It’s essential for freelancers to use this form rather than ITR-1, as ITR-1 does not accommodate business income.
Q2: Can I file ITR with both salary and freelance income under ITR-1?
No, ITR-1 cannot be used if you have freelance income. ITR-1 is intended only for individuals who have income from salary, pension, and other sources such as interest. Freelancers with income from business or profession need to file ITR-3, which is specifically meant for those with both salary and business income. Filing under the wrong form can lead to delays in processing or rejection of your return.
Q3: How can I claim deductions for freelance expenses?
Freelancers can claim various business-related expenses as deductions under the section “Profits and Gains from Business or Profession” in ITR-3. Some common deductible expenses include:
Office Rent: The cost of renting a space for work.
Travel Expenses: Costs associated with business-related travel, including transportation, lodging, and meals.
Software Subscriptions: Expenses related to the software tools you use to perform your freelance work.
Telephone and Internet Bills: If these are used for business purposes.
To claim these deductions, ensure that you maintain proper records and receipts of these expenses. It’s also crucial to apportion personal and business use for mixed expenses like mobile phone bills or vehicle expenses.
Q4: What is the due date for filing ITR for AY 2025-26?
The due date for filing ITR for AY 2025-26 is September 15, 2025, for individuals and non-audit assessees. This includes salaried individuals and non-business taxpayers who do not require an audit. Businesses requiring audit must file by October 31, 2025, and businesses with transfer pricing requirements have an extended deadline of November 30, 2025. If the return is filed after the deadline, penalties and interest will apply.
Q5: Are there penalties for late filing of ITR?
Yes, there are penalties for filing your ITR after the deadline. If you file after the due date, you will be subject to:
Penalties: Late filing can incur a penalty up to ₹5,000 if filed after the deadline but before the end of the assessment year. After that, the penalty can be as high as ₹10,000.
Interest: Interest will be charged under sections 234A, 234B, and 234C on any unpaid taxes. These interest charges will continue to accrue until the tax is paid.
Filing on time is crucial to avoid these additional costs and ensure smooth processing of your return.
Q6: Can I file ITR with multiple income sources using ITR-1?
Yes, you can file ITR-1 if you have multiple sources of income, such as salary, pension, and interest income. However, ITR-1 does not support business income or income from freelance work. If you have income from other sources, like rental income or capital gains, you can still file using ITR-1, but if you have business income, you will need to file ITR-3 instead.
Q7: Can I file a revised return after the due date?
Yes, you can file a revised return under Section 139(5) of the Income Tax Act. If you have made an error in your original return, you can file a revised return within the same assessment year. The revised return allows you to correct mistakes such as missed deductions or incorrect income reporting, helping you avoid penalties. If you realize the error after the assessment year ends, it may be more complicated to revise the return.
Q8: How can I check my ITR status?
To check the status of your ITR, visit the official Income Tax Department portal and log in with your PAN and the assessment year details. You can view the status of your return, including whether it has been processed, if a refund is due, or if any issues have arisen with your filing. Additionally, if you filed through TaxBuddy, you can track the status directly on their platform.
Q9: How can I amend my ITR if I filed the wrong form?
If you’ve filed the wrong ITR form, you can file a revised return. The Income Tax Department allows taxpayers to file a revised return using the correct form before the end of the assessment year. For instance, if you filed ITR-1 by mistake when ITR-3 should have been used, a revised return can be filed using the correct form. However, it is essential to correct the return as soon as possible to avoid penalties.
Q10: Can I file ITR if I missed the original due date?
Yes, you can still file a belated return under Section 139(4) if you missed the original due date. The belated return can be filed by December 31, 2025, for AY 2025-26. However, it will attract penalties, and the processing of your refund may be delayed compared to timely filers. Filing a belated return also means paying interest on any unpaid taxes.
Q11: Can I get a refund if I file my ITR after the due date?
Yes, you can receive a refund even if you file your ITR after the due date, as long as the return is filed within the time allowed for belated returns (i.e., before December 31, 2025). However, your refund may be delayed due to the late filing, and interest will be charged on unpaid taxes. The refund processing time for belated returns can be slower, and you may face delays depending on the workload of the tax department.
Q12: How can I maximize deductions while filing my ITR?
To maximize deductions, make sure to take full advantage of eligible tax-saving instruments such as:
Section 80C: Contributions to PPF, EPF, life insurance premiums, and tuition fees.
Section 80D: Health insurance premiums for yourself and your family.
Section 24(b): Interest on home loans.
Section 10(14): House Rent Allowance (HRA) deductions.
Additionally, if you are a freelancer or business owner, ensure you claim all business-related expenses, such as office rent, travel expenses, and equipment costs. Proper documentation and receipts are essential for claiming these deductions.
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