Figures for tax year 2026-27, checked on 15 October 2026. Have your CA confirm before you file.
You pay for a laptop, software, internet and maybe a coworking desk, and you have heard these "save tax". They do, but only if you file the right way. Settle that first, then decide what to claim.
First, check whether expenses count for you at all
There are two ways to work out a freelancer's profit.
On the presumptive scheme (section 58 of the Income-tax Act, 2025, which replaced 44ADA) your profit is fixed at 50% of gross receipts. The other 50% is treated as covering every expense and all depreciation. You cannot deduct rent, software or a new laptop on top, and the written-down value of your equipment keeps falling as if you had claimed depreciation anyway.
On regular books your profit is receipts minus real business expenses. Every claim below applies here, and you need bills for each one.
So the first sum is simple. Add up a year of genuine business costs. If they come to less than half your receipts, the presumptive scheme gives you a lower profit with less paperwork, and the rest of this playbook is about records you keep for your own sake. If they come to more than half, regular books will save tax. Income tax for freelancers covers who can use the presumptive scheme and the limits.
What you can deduct on regular books
The test in section 34 (old 37(1)) is that the money was spent wholly and exclusively for your work, and was not a capital purchase or a personal expense. In practice, freelancers usually claim:
- Rent for an office or coworking desk, or the work share of home rent
- The work share of electricity, internet and mobile bills
- Software, cloud storage, design tools, stock assets, domains and hosting
- Platform fees, payment gateway charges, bank charges and currency conversion fees
- Payments to subcontractors, assistants and other freelancers
- Travel for client work: cabs, trains and flights, hotels for an on-site job
- Your CA's fees and professional memberships
- Courses that improve skills you already sell (a course for a new line of work is harder to defend)
- Interest on a loan taken for the business
If you are registered for GST and claim input tax credit, the GST on these bills comes back as credit. Deduct only the amount before GST, or you claim it twice. GST-ready invoicing has more.
Platform fees deserve a note. If a client pays $1,000 and the platform keeps $100, record the $1,000 as receipts and the $100 as an expense, using the gross figure from the platform statement rather than the net payout. Platform statements, and any Indian e-commerce TDS, work on the gross amount, so this keeps your books matching them. If you are on the presumptive scheme, the gross or net choice changes your 50% figure, so agree it with your CA.
What you cannot deduct
Personal spending is out, even if it feels work-adjacent: groceries, your own clothes, a family holiday with one client meeting. So is income tax itself, and anything spent on breaking the law.
A laptop, camera or desk is a capital purchase. It is not deducted in the year you buy it; it is depreciated, as below.
Payments where you should have deducted TDS and did not are partly disallowed: 30% of the payment is added back until you deduct and pay the tax. For most freelancers this starts once your own professional receipts crossed ₹50 lakh in the previous tax year, which makes you responsible for deducting TDS when you pay subcontractors. TDS for freelancers explains the rates.
Working from home
Claim the share of your home that is genuinely used for work, and be ready to explain how you got there.
Say you rent a three-room flat for ₹30,000 a month and one room is used only as your office. A third of the rent is ₹10,000 a month, or ₹1,20,000 for the year. Apply the same share to electricity. Internet and mobile are better split by how much you use them for work. Pick a share you can explain, and write down why; 100% is hard to defend if the family uses the same connection.
You cannot claim rent on a flat you own. A room that doubles as a bedroom is a weaker claim than one that is only an office.
Depreciation on laptops, cameras and furniture
Equipment is depreciated on the written-down value, a set percentage each year of whatever value is left. The rates come from Appendix I of the Income-tax Rules, 2026:
Asset | Yearly rate |
|---|---|
Computers, laptops, software | 40% |
Cameras, lights, audio gear and other equipment | 15% |
Desk, chair, fittings | 10% |
If you buy an asset and put it to use for less than 180 days in that tax year, you get half the rate in the first year.
A ₹1,20,000 laptop bought in November is used for under 180 days before 31 March, so year one is 20%: ₹24,000. The value left is ₹96,000, and year two is 40% of that: ₹38,400. A phone or laptop that you also use personally is depreciated only for the work share.
Records to keep
The department can ask for proof years later, and a missing bill turns a deduction into tax plus interest.
Keep these, sorted by tax year
0 of 7 done
The Income-tax Rules, 2026 ask for books and documents to be kept for seven tax years after the tax year ends, and longer if an old assessment is reopened. A separate bank account for business money makes most of this automatic; Separating personal and business money shows how to set one up.
If your expenses are close to half your receipts, or you are not sure whether your work qualifies for the presumptive scheme, this is a good point to get a CA involved. When to hire a CA covers what that costs.
Common questions
Can I claim expenses under 44ADA?
No. Under the presumptive scheme for professionals (section 58 of the Income-tax Act, 2025, which replaced 44ADA) your profit is fixed at 50% of gross receipts, and no expense, allowance or depreciation can be set against it. You cannot deduct rent, software or a laptop on top. If your real costs are higher than half your receipts, keep regular books instead.
Can freelancers claim work from home expenses in India?
Yes, on regular books, for the part genuinely used for work. If one room of a three-room rented flat is used only as your office, a third of the rent is a fair claim, with the same logic for electricity. Internet and phone can be split by business use. Keep the rent agreement and bills, and do not claim rent on a home you own.
How much depreciation can I claim on a laptop?
Computers and software are depreciated at 40% of written-down value a year. If you buy a laptop and use it for work for less than 180 days in the tax year of purchase, you get half that rate, 20%, in the first year. A ₹1,20,000 laptop bought in November gives ₹24,000 in year one and ₹38,400 in year two.
Can I pay my freelance assistant in cash?
You can, but if you pay any one person more than ₹10,000 in cash in a single day, that expense is not allowed as a deduction. Splitting one bill across several cash payments on the same day does not help, because the limit counts the total paid to that person that day. UPI or a bank transfer keeps the deduction and gives you the record.
