Filing ITR for Salary + Freelance Side Income
- PRITI SIRDESHMUKH
- 4d
- 10 min read
Filing an Income Tax Return (ITR) when earning both a salary and freelance income requires understanding how each income stream is taxed under the Income Tax Act, 1961. Salary is taxed under the “Income from Salary” head, while freelance earnings fall under “Profits and Gains from Business or Profession.” Choosing the correct ITR form, reporting income accurately, and claiming applicable deductions ensures compliance and avoids penalties. With the growing trend of professionals taking up side gigs, the process has become easier through digital platforms like TaxBuddy, which simplify form selection, auto-calculate taxes, and provide expert assistance.
Table of Contents
13. Conclusion
14. FAQs
Understanding Dual Income Taxation in India
When an individual earns from both employment and freelancing, each source is treated under a different head of income for tax purposes. Salary income falls under "Income from Salary," which includes basic pay, allowances, bonuses, and perquisites. Freelance income, on the other hand, is classified as "Profits and Gains from Business or Profession." Both these income streams are added together to determine the total taxable income. The tax is then calculated based on applicable slab rates under either the old or new tax regime. Understanding this distinction helps ensure accurate reporting, avoid double taxation, and claim eligible deductions correctly.
Choosing the Right ITR Form for Salary and Freelance Income
The selection of the correct ITR form depends on how the freelance income is handled. Individuals maintaining detailed accounts of their freelancing work should use ITR-3, as it allows for expense deductions and detailed reporting. Those opting for the presumptive taxation scheme under Section 44ADA can file ITR-4 (Sugam), where 50% of gross receipts are considered income and no expense details are required. Both forms allow the inclusion of salary income alongside professional income. Choosing the wrong form can lead to defective return notices, so ensuring accuracy at this step is essential.
How to Report Salary and Freelance Earnings in ITR
Salary income is reported using details from Form 16 issued by the employer, which includes components such as basic pay, allowances, and TDS deducted. Freelance income must be reported under the head “Business or Profession.” If maintaining books of accounts, total receipts, expenses, and net income are reported. Under presumptive taxation, only gross receipts and presumptive income (50% of total) need to be declared. TDS deducted by clients or platforms can be verified in Form 26AS or AIS and claimed as credit while filing. The total tax liability is computed on the combined income from both sources.
Tax Deductions and Allowable Expenses for Freelancers
Freelancers can claim legitimate business-related expenses to reduce taxable income. These include internet bills, office rent, utilities, software subscriptions, hardware purchases, and travel costs related to work. Expenses must be supported by invoices and recorded accurately. Under Section 80C, 80D, and 80G, freelancers can also claim deductions for investments and donations. Those filing under Section 44ADA cannot claim individual expenses as 50% of their gross receipts are automatically considered as expenditure. Proper record-keeping helps in maximizing deductions and avoiding future disputes during scrutiny.
Presumptive Taxation under Section 44ADA
Section 44ADA provides relief to small professionals and freelancers with gross receipts up to ₹50 lakh in a financial year. It allows them to declare 50% of total receipts as taxable income without maintaining detailed books of accounts. This simplified scheme reduces compliance and helps in faster filing. However, opting for this scheme restricts the ability to claim actual business expenses. Advance tax liability still applies if total tax payable exceeds ₹10,000 in a year. This option is particularly useful for part-time freelancers who wish to minimize compliance while meeting tax obligations.
TDS and Advance Tax Rules for Freelance Income
TDS on freelance payments is deducted by clients if the annual payment exceeds ₹30,000. The deducted amount is reflected in Form 26AS and can be claimed as a credit while filing ITR. Freelancers must check that all TDS entries match with invoices raised. If total tax liability exceeds ₹10,000, advance tax payments are mandatory in four installments during the financial year—June, September, December, and March. Failure to pay advance tax can lead to interest under Sections 234B and 234C. Timely payments and reconciliations ensure smooth filing and avoid penalties.
Step-by-Step Process to File ITR for Salary + Freelance Income
Collect all necessary documents including Form 16, Form 26AS, bank statements, invoices, and expense receipts.
Calculate total income by combining salary income with freelance earnings.
Determine applicable deductions and exemptions.
Select the correct ITR form (ITR-3 or ITR-4) based on the nature of freelance income.
Log in to the official Income Tax portal and input income details accurately.
Verify pre-filled data such as TDS and PAN details.
Compute total tax payable and make any pending advance tax payments.
Submit the return and complete e-verification via Aadhaar OTP, net banking, or electronic signature.
Important Documents Required Before Filing
Tax filing requires several documents to ensure accuracy and compliance. These include Form 16 from the employer, Form 26AS and AIS for income and TDS verification, bank statements, freelance invoices, proof of business expenses, and investment documents for deductions under Section 80C to 80U. Freelancers should also maintain copies of GST filings if applicable, and digital payment proofs for income received. Having all documents ready before filing minimizes errors and reduces the chances of receiving a defective return notice from the Income Tax Department.
Filing ITR Online through the Income Tax Portal
The Income Tax e-filing portal allows salaried and self-employed individuals to file returns digitally. After logging in using PAN credentials, users can choose the appropriate form and fill in details for salary and professional income. Pre-filled data such as TDS and employer details can be verified and corrected if necessary. Once tax computation is complete, the return can be submitted and verified electronically. The system also provides an acknowledgement (ITR-V) for reference. For a smoother experience, users can consider platforms like TaxBuddy, which automate this process and reduce manual effort.
Role of Bank Account Details and PAN in ITR Filing
Bank account details are crucial for receiving tax refunds and ensuring correct linkage with PAN. The Income Tax Department mandates pre-validation of bank accounts to process refunds. Freelancers often use separate accounts for business income, and these should be linked with the same PAN to ensure accurate credit of TDS and tax payments. Mismatched details between PAN and bank records can delay refunds or trigger compliance alerts. Maintaining a single PAN-linked account for professional income ensures smooth reconciliation with Form 26AS and AIS.
Due Dates, Penalties, and Compliance Deadlines for AY 2025–26
For individuals earning salary and freelance income, the due date for filing ITR for Assessment Year 2025–26 is July 31, 2025. If the accounts are subject to audit, the deadline extends to October 31, 2025. Delayed filing attracts a penalty of up to ₹5,000 under Section 234F, and interest is applicable for unpaid taxes. Failure to pay advance tax on time can result in additional interest charges. Keeping track of compliance dates helps avoid unnecessary costs and ensures a clean tax record.
How TaxBuddy Simplifies Filing for Salary + Freelance Income
TaxBuddy provides an intuitive online solution for individuals managing dual income sources. It simplifies ITR filing through features like automated income import from Form 16 and invoices, AI-based error detection, and expert review. Freelancers can upload documents, calculate tax liability, and claim deductions seamlessly through the app. Whether choosing the old or new regime, the platform ensures compliance with the latest rules and filing deadlines. Using TaxBuddy minimizes errors, saves time, and helps users stay compliant without the hassle of manual calculations or form confusion.
Conclusion
Managing taxes when earning from both salary and freelancing may seem complex, but with the right knowledge and tools, it becomes straightforward. By selecting the correct ITR form, maintaining accurate records, and paying advance tax on time, dual-income earners can ensure compliance and avoid penalties. For anyone looking for assistance in tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-
assisted options?
TaxBuddy provides both self-filing and expert-assisted plans to suit different types of taxpayers. The self-filing plan is ideal for individuals with straightforward income sources like salary and small freelance earnings, as it uses an AI-driven interface that auto-fills data and performs error checks. For more complex cases involving multiple income heads, foreign income, or high-value transactions, the expert-assisted plan connects users directly with tax professionals who review and file the return on their behalf. This flexibility allows taxpayers to choose a filing method based on their comfort level and complexity of their finances.
Q2. Which is the best site to file ITR?
The official Income Tax Department’s e-filing portal is the primary and legally recognized platform for filing income tax returns in India. However, many taxpayers prefer using trusted third-party platforms such as TaxBuddy because they simplify the filing process. TaxBuddy integrates automated validation, error detection, and TDS reconciliation features that help prevent common mistakes and ensure smoother compliance. It also offers expert review and post-filing support, which makes it more convenient for individuals managing multiple income sources, deductions, or complex tax calculations.
Q3. Where to file an income tax return?
An income tax return can be filed directly through the Income Tax Department’s e-filing website by logging in with your PAN credentials. Alternatively, you can file using professional tax filing platforms like TaxBuddy, which provide an easy-to-navigate interface with automated tools for form selection, income entry, and document uploads. These platforms simplify the technical steps of e-filing and reduce the likelihood of filing errors. The choice between the government portal and a private platform depends on the taxpayer’s familiarity with the process and the complexity of their income.
Q4. Which ITR form should I use if I have both salary and freelance income?
The choice of ITR form depends on whether you maintain detailed accounts for your freelance income or opt for presumptive taxation. If you maintain books of accounts and record your business expenses, you should file ITR-3, which allows detailed income reporting and deductions. If you prefer the simplified presumptive taxation route under Section 44ADA, where 50% of gross receipts are treated as income, you can file ITR-4 (Sugam). Both forms accommodate salary income alongside freelance earnings, so the choice depends on the level of record-keeping and tax planning preferred.
Q5. Can I claim expenses related to freelancing?
Yes, freelancers can claim expenses that are directly related to their professional work, provided they maintain proper records and file ITR-3. Examples include internet and phone bills, rent for workspace, equipment purchases, travel for work, and subscription or software expenses. These deductions reduce the taxable income and overall tax liability. However, those who opt for the presumptive taxation scheme under Section 44ADA through ITR-4 cannot claim individual expenses, since the law already considers 50% of the total receipts as deemed expenses. Proper documentation is crucial to justify claims during scrutiny.
Q6. Do I need to pay advance tax on freelance income?
Yes, freelancers must pay advance tax if their total tax liability for the year exceeds ₹10,000. This rule applies even when you have salary income that already has TDS deducted by your employer. Advance tax payments are made in four installments—by June 15, September 15, December 15, and March 15—based on estimated earnings. Missing these deadlines can result in interest under Sections 234B and 234C. Paying advance tax ensures timely compliance and helps avoid a lump-sum payment at the end of the year, making financial planning more manageable for freelancers.
Q7. Can I claim TDS deducted by clients or employers?
Yes, both employer and client TDS deductions can be claimed as tax credits while filing the income tax return. Employers usually deduct TDS on salary and provide Form 16 as proof, while clients who pay for freelance services deduct TDS under Section 194J and report it in Form 26AS. It’s essential to verify that all TDS entries in Form 26AS and the Annual Information Statement (AIS) match your income records. Any mismatch can delay refund processing. Claiming accurate TDS credits ensures that only the balance tax, if any, is payable at the time of filing.
Q8. How to choose between old and new tax regimes?
Choosing between the old and new tax regimes depends on your income structure and eligible deductions. The old regime allows claiming deductions under Sections 80C, 80D, 80G, HRA, and other exemptions, which benefits individuals with substantial investments and expenses. The new regime offers lower tax rates but fewer deductions, making it more suitable for those without major exemptions. Salaried professionals and freelancers can calculate their tax liability under both regimes before filing to determine which results in lower payable tax. Platforms like TaxBuddy include built-in comparison tools to simplify this decision.
Q9. What documents are required for filing ITR with salary and freelance income?
To file ITR for salary and freelance income, you will need several documents:
Form 16 issued by your employer
Form 26AS and AIS for verifying TDS and income
Bank account statements showing income credits
Freelance invoices and receipts
Proof of business expenses (if filing ITR-3)
Investment proofs for claiming deductions under Sections 80C to 80U
PAN card and Aadhaar card for identification Keeping these documents organized ensures smooth filing and reduces the chance of receiving a defective return notice from the department.
Q10. What happens if I miss the filing deadline?
If you miss the due date for filing your income tax return, you can still submit a belated return before December 31 of the assessment year, but a late filing fee under Section 234F will apply—up to ₹5,000 depending on your income. Additionally, interest may be charged on unpaid taxes, and you may lose the ability to carry forward certain losses for future set-off. Refunds, if any, are also delayed. Filing within the due date helps maintain compliance and ensures faster refund processing without additional penalties.
Q11. Can I revise my return if I forget to include freelance income?
Yes, if any income, such as freelance receipts, is left out or reported incorrectly, you can file a revised return under Section 139(5) before the end of the assessment year. The revised return replaces the original one, updating all necessary details. This provision allows taxpayers to correct genuine mistakes without attracting penalties, provided it’s filed within the permitted time. However, frequent revisions may invite closer scrutiny from the tax department, so it’s best to double-check income details before submission.
Q12. How does TaxBuddy help individuals with multiple income sources?
TaxBuddy simplifies filing for individuals earning from both salary and freelancing by integrating all income sources within a single interface. The platform auto-imports data from Form 16, Form 26AS, and invoices, reconciles TDS entries, and calculates tax liability under both regimes for comparison. Its AI-based validation checks eliminate common filing errors, and expert-assisted plans provide professional review to ensure compliance. Users also receive post-filing support, including assistance with refunds, rectifications, and notices. This end-to-end service makes TaxBuddy a comprehensive solution for modern taxpayers managing diverse income streams.
