Income tax for freelancers in India

Figures for tax year 2026-27, checked on 15 October 2026. Have your CA confirm before you file.

Client money lands in your account and nobody works out your tax the way an employer would. That job is now yours, along with paying it on time. This playbook does the sums with real numbers, then covers the return.

What changed on 1 April 2026

The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026. Two changes matter to you.

"Previous year" and "assessment year" are gone. There is now one tax year, the twelve months from 1 April. Tax year 2026-27 runs from 1 April 2026 to 31 March 2027.

Section numbers changed. Your CA, the e-filing portal and older articles will use both sets for a while, so keep this table handy.

The return you may still be filing this year is for tax year 2025-26 (assessment year 2026-27). That one falls under the old Act, but the slabs and rebate are the same, so every number below applies to both years.

How your freelance income is taxed

Your fees are income from "profits and gains of business or profession". If you are resident in India, that includes fees from foreign clients. Your profit is added to any salary, interest or rent you have, and the total is taxed at slab rates.

Income tax and GST are separate. GST depends on your turnover and is covered in GST registration for freelancers. Being under the GST limit does not make your income tax-free.

The two regimes

The new regime is the default. You pay lower rates but give up most deductions.

If your total income is ₹12 lakh or less, a rebate of up to ₹60,000 wipes out the tax. Just above ₹12 lakh, marginal relief caps your tax at the amount by which you cross ₹12 lakh, until about ₹12.7 lakh.

The old regime, for those under 60, is nil up to ₹2.5 lakh, 5% to ₹5 lakh, 20% to ₹10 lakh and 30% above. Its rebate is smaller (up to ₹12,500, for income up to ₹5 lakh), but you keep deductions like ₹1.5 lakh for PPF, ELSS and insurance (old 80C, now section 123) and health insurance (old 80D, now section 126).

Both regimes add a 4% health and education cess on the tax. Surcharge starts only above ₹50 lakh of income.

One rule catches freelancers: because you have business income, opting out of the new regime is a formal choice made in your return, filed by the due date, and you can switch back only once. After that you stay in the new regime for as long as you have business income (section 202(4)). Do not flip regimes on a whim.

Budget 2026 left all of this unchanged.

Presumptive scheme or regular books

The presumptive scheme for professionals (section 58 of the 2025 Act, which replaced section 44ADA) lets you declare 50% of your gross receipts as profit. You do not have to prove expenses, and you do not need a tax audit.

It is open to resident individuals and partnership firms (not LLPs) whose gross receipts for the year are up to ₹50 lakh, or up to ₹75 lakh if cash receipts are 5% or less of the total. A cheque that is not account payee counts as cash.

The catch is the list of professions. Section 62(4) names legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, information technology and company secretary work, plus anything the Board notifies. Film artists are covered through a notification carried over from the old Act, and the rules define the term to include editors, story, screenplay and dialogue writers, lyricists and dress designers working on films.

Software developers and IT consultants fit "information technology", architects fit "architectural", and interior designers fit "interior decoration".

Graphic and UI design, content writing, marketing and translation are not on the list, and no CBDT circular adds them. If your work is not a listed profession, the 50% scheme is not open to you on the wording of the law. Some freelancers in these fields are filed under the presumptive scheme for businesses instead (6% of turnover received through bank or UPI, 8% on the rest), which the Act closes only to the listed professions; others keep regular books. Whether your work counts as a profession or a business is a judgement on your facts, so get your CA's view in writing and keep it consistent year to year.

You can declare more than 50% if your real profit is higher. If you want to declare less, you must keep books and get a tax audit once your income crosses the basic exemption limit. Regular books make sense when your genuine expenses are more than half your receipts; Business expenses freelancers can claim covers what counts.

On the presumptive scheme, business expenses, depreciation and losses cannot be set against the 50% figure. Old-regime deductions such as PPF or health insurance are different: they come off your gross total income at a later step, so you can still claim them on top of presumptive income if you choose the old regime.

A worked example

Meera is a freelance developer in Pune. In tax year 2026-27 she bills ₹30 lakh, all by bank transfer. ₹6 lakh comes from an Indian company that deducts 10% TDS (₹60,000); the rest is from clients abroad. Her real expenses for the year are ₹4 lakh.

1. 1

   Step 1: Presumptive scheme, new regime

   Profit is 50% of ₹30,00,000, so ₹15,00,000. Tax: 5% of ₹4 lakh (₹20,000) + 10% of ₹4 lakh (₹40,000) + 15% of ₹3 lakh (₹45,000) = ₹1,05,000. No rebate, because income is above ₹12 lakh. Add 4% cess (₹4,200). Total ₹1,09,200.

   You'll needgross receipts
2. 2

   Step 2: Presumptive scheme, old regime

   Same ₹15,00,000, less ₹1,50,000 in PPF and ELSS and ₹25,000 health insurance, gives ₹13,25,000. Tax: ₹12,500 + ₹1,00,000 + 30% of ₹3,25,000 (₹97,500) = ₹2,10,000. Add cess (₹8,400). Total ₹2,18,400.

   You'll needdeduction proofs
3. 3

   Step 3: Regular books, new regime

   Profit is ₹30,00,000 minus ₹4,00,000, so ₹26,00,000. Tax: ₹20,000 + ₹40,000 + ₹60,000 + ₹80,000 + ₹1,00,000 + 30% of ₹2,00,000 (₹60,000) = ₹3,60,000. Add cess (₹14,400). Total ₹3,74,400.

   You'll needbills for every expense

The presumptive scheme in the new regime wins by a wide margin. For the old regime to match it, Meera would need more than ₹5.37 lakh of deductions. Regular books would only win if her expenses were more than ₹15 lakh, half her receipts.

Change one number and the picture moves. If Meera billed ₹24 lakh instead, her presumptive profit would be ₹12 lakh and the rebate would bring her tax to zero. Every rupee of TDS deducted from her would then come back as a refund.

Advance tax: the dates to put in your calendar

If your tax for the year, after TDS, will be ₹10,000 or more, you pay it during the year as advance tax.

For Meera, that is ₹1,09,200 of tax minus ₹60,000 of TDS, so ₹49,200 by 15 March 2027. Paying early is fine; the 15 March date is only the last day.

Miss a date and you pay simple interest of 1% a month on the shortfall. Pay through the e-filing portal's "e-Pay Tax" option, pick tax year 2026-27, and save the challan. Instalments paid by 31 March still count as advance tax for that year.

Which ITR to file

File ITR-4 (Sugam) if you use the presumptive scheme, you are resident, your total income is ₹50 lakh or less, and nothing on the form's exclusion list applies. The ones freelancers hit most are: losses to carry forward, unlisted shares, a directorship, long-term gains on listed equity above ₹1.25 lakh, assets or a bank account outside India, income from a source outside India, and a claim for foreign tax credit. If most of your clients are abroad, ask your CA whether ITR-4 still fits you.

File ITR-3 if you keep regular books, your total income is above ₹50 lakh, or any of those exclusions applies.

ITR-1 and ITR-2 do not cover business or professional income, so they are not options once you freelance.

Due dates now depend on whether you need an audit:

For tax year 2025-26, the non-audit date was 31 August 2026. If you missed it, file a belated return by 31 December 2026; the late fee is ₹5,000, or ₹1,000 if your total income is ₹5 lakh or less. CBDT has extended this year's audit-case due date to 21 November 2026. Returns can now be revised for twelve months after the tax year ends, with a fee in the last three months.

When you need a tax audit

A professional needs a tax audit when gross receipts cross ₹50 lakh and the presumptive scheme is not used. Declaring income under the presumptive scheme, up to the ₹75 lakh limit, removes the audit requirement. Declaring less than 50% brings it back once your income is above the basic exemption limit. Audits cost real money; When to hire a CA has typical fees.

Before you file

Two habits make all of this easier: a separate account for client money (Separating personal and business money) and invoices that show GST and TDS correctly (GST-ready invoicing). If most of your clients are abroad, Getting paid from abroad covers the paperwork your bank and CA will ask for. If you sell to Indian companies, Udyam registration gives you the MSME payment protections. And when you outgrow a sole proprietorship, read Sole proprietorship, OPC or LLP.

If you only do one thing this year, put 15 March in your calendar with an amount next to it.