Filing ITR for freelancers and professionals can be complex due to income calculations, TDS, and compliance rules. Understanding both current and upcoming tax laws helps ensure smooth and penalty-free filing.

ITR FILING UNDER INCOME-TAX ACT, 1961 (FY 2025-26, AY 2026-27)

Self-employed individuals must report income under "Profits & Gains of Business or Profession (PGBP)".

Applicable ITR Forms

• ITR-4: For presumptive taxation (simple cases)
• ITR-3: If maintaining books of accounts

Due Date

• July 31, 2026 (non-audit cases)

Key Presumptive Taxation Options

• Section 44ADA (Professionals)
  • 50% of receipts treated as profit
  • Applicable if income < ₹75 lakh
  • Example: ₹50 lakh income → ₹25 lakh taxable
• Section 44AD (Businesses)
  • 8% (cash) / 6% (digital) of turnover
  • Applicable up to ₹2–3 crore

Key Compliance Steps

• Maintain invoices and records
• Deduct expenses (if not opting presumptive)
• Verify TDS from clients (10% under Section 194J) via:
  • Form 26AS
  • AIS
  • TIS

Deductions Available

• Section 80C: Investments
• Section 80D: Health insurance
• Section 37(1): Business expenses

Advance Tax

• Pay quarterly under Section 211
• Avoid interest under Sections 234B & 234C

Forms Used

• Form 16A (TDS by clients)
• ITR-3 / ITR-4
• Form 3CD (if audit applicable under Section 44AB)

ITR FILING UNDER INCOME-TAX ACT, 2025 (FROM FY 2026-27)

The new law simplifies structure but keeps core taxation principles unchanged.

Key Changes

• Section 44AD → Section 285
• Section 44ADA → Section 286
• Section 194J → Section 393(3)
• Section 80C/80D → Section 123/124
• Section 37(1) → Section 210

Form Changes

• Form 16A → Form 131
• Form 26AS/AIS/TIS → Form 168
• Form 3CD → Form 135

Terminology Change

• Financial Year + Assessment Year → Tax Year

Important Note

• Presumptive taxation rates remain the same
• Filing process remains largely unchanged
• Digital compliance becomes more streamlined

PRACTICAL EXAMPLE

Freelancer with ₹60 lakh income:

Under Act 1961:

• Use ITR-4
• 50% profit = ₹30 lakh taxable
• TDS ₹6 lakh reflected in Form 26AS
• Claim deduction ₹1.5 lakh under Section 80C

Under Act 2025:

• Same calculation
• Use Form 131 & Form 168 for verification
• Section 286 applies

PRACTICAL TIP / CA INSIGHT

• Opt for presumptive taxation to reduce compliance burden
• Always reconcile TDS with AIS/Form 168
• Pay advance tax on time to avoid interest
• Maintain basic records even under presumptive scheme
• Plan deductions early to reduce tax liability

FAQ SECTION

1. Which ITR form is best for freelancers?
   ITR-4 is suitable for presumptive taxation; otherwise, use ITR-3.
2. Is audit required for professionals?
   Not if income is within ₹75 lakh under Section 44ADA.
3. Will tax rates change under Act 2025?
   No major change in presumptive rates—only renumbering of sections.
4. What is the TDS rate for professionals?
   10% under Section 194J (now Section 393 under new Act).
5. Can I claim expenses under presumptive taxation?
   No separate expense claims—profit is assumed at fixed percentage.

CONCLUSION

For self-employed professionals, the transition from the Income-tax Act, 1961 to the Income-tax Act, 2025 mainly involves changes in terminology, sections, and forms—not in core tax principles. Presumptive taxation remains a powerful and simple option. Timely filing, correct reporting, and proper TDS reconciliation are key to avoiding notices and penalties.

For expert guidance on this topic, contact your tax professional today.