How to File ITR if You Have Salary + Freelance Income
PRITI SIRDESHMUKH- 7 hours ago
- 8 min read
Filing Income Tax Returns (ITR) when you have both salary and freelance income requires using the correct ITR form, understanding how to report each income source, and knowing which deductions apply. Freelancers can take advantage of the presumptive taxation scheme under Section 44ADA to simplify their filings, but the right approach depends on their income level and accounting methods. This guide explains the step-by-step process for salaried professionals with freelance income and how tools like TaxBuddy can make the filing process smoother.
Table of Contents
How to File ITR If You Have Salary and Freelance Income in 2025?
To file ITR when you have both salary and freelance income, you need to select the appropriate form based on your income type and accounting method. If you maintain detailed accounts, use ITR-3 to report both salary and freelance income. If you opt for the presumptive taxation scheme under Section 44ADA, you can file ITR-4 and declare 50% of your freelance income as taxable without the need for detailed expense tracking. Ensure all income is reported accurately, claim eligible deductions, and utilize the tax credits for TDS deducted by your employer and clients. Using tools like TaxBuddy can simplify this process and ensure compliance.
Identify the Correct ITR Form
Choosing the right ITR form is crucial when you have both salary and freelance income, as the tax filing process depends on the nature of your income and accounting method.
ITR-1 is meant for individuals who only have salary or pension income, along with income from other sources like interest. This form is not applicable if you have freelance income, as it does not cover income from business or profession.
ITR-3 is the correct form if you have both salary income and freelance income. It is designed for individuals who earn income from business or profession and maintain detailed accounts. If you’re a freelancer maintaining books of accounts, you will need to file ITR-3 to report your freelance income and claim any eligible business expenses.
ITR-4 (Sugam) is an option for freelancers who opt for the presumptive taxation scheme under Section 44ADA. This scheme simplifies tax filing for freelancers by allowing you to declare 50% of your gross receipts as taxable income without the need for detailed expense documentation. It is ideal if your freelance income is up to Rs 50 lakhs. This form is designed for individuals who don’t maintain detailed books of accounts and wish to use the simplified presumptive taxation method.
Reporting Salary Income
Reporting salary income is relatively straightforward, but it requires accuracy in capturing all relevant information.
Form 16, issued by your employer, provides a detailed summary of your salary for the year, including allowances, deductions, and the TDS deducted at source. It serves as the primary document for reporting salary income.
Your salary income should be reported under the section titled “Income from Salary” in the chosen ITR form (ITR-3 or ITR-4). This section will include all salary-related details, such as your gross salary, allowances, deductions, and TDS, as provided by your employer in Form 16.
Standard Deduction: Under the new tax regime, salaried individuals are entitled to a standard deduction of Rs 75,000 from their salary income. This deduction is available irrespective of other deductions you claim, and it directly reduces your taxable salary.
Reporting Freelance Income
Freelancers must ensure that their freelance income is correctly reported to avoid tax discrepancies. Freelance income is considered as income from business or profession.
When reporting freelance income, it is essential to include it under "Income from Business or Profession" in the ITR form.
If you maintain detailed accounts for your freelance work and have significant business expenses, ITR-3 is the appropriate form to file. Under ITR-3, you can report your income and deduct expenses such as rent, internet, travel, office supplies, and other business-related costs that are necessary for your freelance work. All expenses must be wholly and exclusively related to your business.
If you prefer to take advantage of the presumptive taxation scheme under Section 44ADA, you can opt to file ITR-4. This scheme simplifies the filing process, as it allows you to declare 50% of your freelance gross receipts as taxable income. No need for detailed expense tracking or record-keeping.
GST Registration: Freelancers must be aware that if their turnover exceeds Rs 20 lakhs (or Rs 10 lakhs for special category states), they are required to register for GST and comply with GST filing requirements.
Tax Deducted at Source (TDS)
TDS is deducted at different rates for salary and freelance income. It is important to track the TDS deducted for both types of income and claim it correctly while filing your ITR.
Salary Income TDS: Your employer deducts TDS on your salary income before paying you. The amount deducted is reported in Form 16, and you can claim the tax credit for this deduction while filing your return.
Freelance Income TDS: Freelance income is subject to TDS under Section 194J at the rate of 10% for professional services. If your clients deduct TDS on your freelance income, this amount is reflected in Form 26AS, and you can claim it as a credit while filing your ITR.
Both salary and freelance TDS are credited against your total tax liability, ensuring you do not pay more tax than required.
Filing Process
Filing your ITR with both salary and freelance income involves several steps to ensure compliance and accuracy.
Collect Documents: Gather the necessary documents for both salary and freelance income. This includes Form 16 from your employer (for salary), invoices and bank statements for freelance income, and Form 26AS (Tax Credit Statement) for any TDS deductions. You will also need to keep records of any deductions you are eligible for.
Select the Correct ITR Form: Based on your accounting method and income types, select the correct form (ITR-3 or ITR-4).
Fill in the Details: Input your salary income under the "Income from Salary" section and freelance income under "Income from Business or Profession." Additionally, include any eligible deductions and claim TDS credits based on the documents you’ve collected.
Verify and Submit: After filling out the ITR form, verify the details through e-verification methods such as Aadhaar OTP or net banking. The return must be filed before the due date, which is typically July 31 for individual taxpayers.
Presumptive Taxation Scheme Benefits
The presumptive taxation scheme under Section 44ADA offers several benefits for freelancers, especially those with a turnover of up to Rs 50 lakhs.
The scheme simplifies tax filing by removing the need for detailed accounting or maintaining books of accounts. You do not need to track individual business expenses.
Freelancers filing under ITR-4 can declare 50% of their gross receipts as taxable income, with no need for additional documentation or proof of expenses. This simplifies the process significantly, particularly for those with relatively low overhead costs.
The standard deduction of Rs 75,000 is also available under this scheme, further reducing the taxable income.
This scheme provides a hassle-free option for freelancers looking to minimize paperwork and simplify their tax filings, particularly if their turnover remains below the prescribed limit.
Conclusion
Filing ITR when you have both salary and freelance income can be straightforward if you choose the correct form and understand the applicable deductions. By leveraging tools like TaxBuddy, you can ensure your tax return is filed accurately and efficiently, avoiding unnecessary complications. For anyone looking for assistance in tax filing, you download the TaxBuddy mobile app for a simplified, secure, and hassle-free ITR filing experience.
FAQs
Q1. Which ITR form should I file if I have salary and freelance income?
If you have both salary and freelance income, you need to choose the appropriate ITR form based on your accounting method and income type.
ITR-3 should be filed if you maintain detailed accounts for your freelance work and report income under "Income from Business or Profession."
ITR-4 is the right choice if you prefer the presumptive taxation scheme under Section 44ADA, where 50% of your gross receipts are deemed to be taxable income, simplifying the filing process without needing detailed expenses.
Q2. Can I claim expenses for my freelance work?
Yes, if you're filing ITR-3, you can claim actual expenses that are wholly and exclusively used for your freelance business. These could include expenses like rent, equipment, software, travel, and internet charges. However, if you opt for ITR-4 under the presumptive taxation scheme, expenses are automatically deemed at 50% of your gross receipts, and no detailed expense records are required.
Q3. Do I need to pay GST on my freelance income?
Yes, GST registration is mandatory for freelancers if their turnover exceeds Rs 20 lakhs (Rs 10 lakhs for special category states). GST must be filed on income earned from freelancing once this threshold is crossed, and it applies even if your freelance income is under the presumptive taxation scheme. Freelancers are required to collect and remit GST if applicable, ensuring compliance with indirect tax laws.
Q4. How is TDS handled for freelance income?
For freelance income, your clients are required to deduct TDS at 10% under Section 194J on professional fees. This TDS amount will be shown in Form 26AS. You can claim the TDS deducted as a tax credit while filing your ITR. Ensure you cross-check the TDS details in your Form 26AS before filing your return to avoid discrepancies.
Q5. Can I file my return through a mobile app?
Yes, filing your ITR through a mobile app is a convenient option. TaxBuddy offers a seamless mobile app experience for ITR filing, including e-verification, TDS, and GST compliance. It also provides expert-assisted services, ensuring you file your returns accurately and on time, with all required documents uploaded directly from your phone.
Q6. How do I claim deductions for my freelance business?
If you're filing ITR-3, you can claim deductions for expenses directly related to your freelance work. This includes business-related expenses such as office supplies, rent, internet costs, software, and travel expenses. You need to ensure these expenses are "wholly and exclusively" used for business purposes. On the other hand, if you are filing ITR-4 under the presumptive taxation scheme, the expenses are automatically deemed at 50% of your gross receipts, without the need for documentation.
Q7. Can I file my ITR if I haven't received Form 16?
Yes, you can still file your ITR even if you haven't received Form 16 from your employer. Instead, you can use alternative documents such as payslips, bank statements, or salary certificates to report your salary income. However, make sure all the information is correct and accurately reflects your earnings for the year.
Q8. What happens if I file my ITR after the due date?
If you file your ITR after the due date (typically July 31 for individuals), you may be liable for penalties or interest. The penalty for late filing can go up to Rs 5,000, depending on when you file. Additionally, if taxes are due, you may be charged interest under Section 234A. It’s best to file your return on time to avoid these extra charges and ensure you meet compliance deadlines.
Q9. Do I need to keep proof for all my freelance expenses?
Yes, if you are filing ITR-3, you need to keep receipts and documentation for all expenses related to your freelance work, such as invoices for office supplies, rent, or travel expenses. For ITR-4, you don’t need to maintain detailed expense records, as the scheme assumes 50% of your freelance receipts as taxable income, eliminating the need for expense documentation.
Q10. Can I change the ITR form after submitting it?
No, once your ITR is submitted, you cannot change the form. If you realize there was a mistake or if you filed the wrong form, you can file a revised return within the prescribed time limits (usually before the end of the relevant assessment year). Always double-check your form before submission to avoid having to file a revision.
Q11. What if my freelance income is under Rs 50 lakhs but exceeds Rs 20 lakhs?
If your freelance income exceeds Rs 20 lakhs, you are required to register for GST and comply with all GST filing obligations, regardless of whether your income is below the Rs 50 lakh threshold for the presumptive taxation scheme. Freelancers in this scenario must collect and pay GST on the services they provide, and the applicable GST rules must be followed.
Q12. Can TaxBuddy assist with filing both salary and freelance income?
Yes, TaxBuddy provides expert-assisted services for filing both salary and freelance income. The platform helps you choose the correct ITR form, ensures all income sources are accurately reported, and assists with claiming deductions and TDS credits. TaxBuddy also supports GST registration and filing for freelancers, making it a one-stop solution for managing your tax filing needs.
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