A Complete Guide On Income Tax Rules for Indian Bloggers & Freelancers

A secondary source of income for most and a primary one for a limited number of millennials, freelancing jobs have been the go-to option for most. A steep rise in the number of bloggers who vest their complete time into a professional domain, the augmented curiosity of income tax, bothers most of them.

The burning question- Are freelancers eligible to pay income tax? – Still, exists. Putting an end to all the queries, we have got the answers for you. And the answer is, “YES”. If you get paid because of your freelancing jobs and your annual income amounts to more than 2.5 lakhs, you are eligible to pay income tax.

Who Can Pay Income Tax?

Income Tax Rules in India states clearly that income tax is supposed to be paid on the income earned from any source as per the tax slabs and guidelines. Given that there are multiple ways of freelancing, it opens up a plethora of channels to earn. Be it through blogging, advertising, or even sales, freelancing opportunities are endless.

As a budding blogger and a novice to the income tax rules, how do you go about it? Let’s take a look.

What Is Income Tax?

Income tax is paid on the total income and not total revenue, earned by you in a single financial year. Total income is different total revenue. Total revenue amount is the entire gross amount which you receive in an assessment year. It could be your total income inclusive of incentives, bonuses et al. However, total income is what remains after all the expenditure and depreciative amount.

Do I Need Any Specific Documents?

In case you blog for an international organisation, a valid government id proof and PAN card is essential. Else you will not be able to draw the payment in the first place. Therefore, it is essential that as a blogger you have your PAN card available on you at all times.

In case your annual income tends to be more than 2.5 lakhs, you become eligible for the books of the Revenue Department and income tax rules to pay the income tax. There are multiple ways where you can reduce the taxable amount.

How Do I File ITR And Pay Income Tax?

Reporting your income under a registered company name makes it easier for you to showcase your income. As direct expenditures and deprecating asset value, you can claim compensation and tax benefits under various income tax rules. It also makes you eligible to fill income tax statements on a quarterly basis and also file the income tax returns. However, this strategy should be applied only if the amount incurred out of blogging falls under a seven-digit figure.

As a self-employed blogger or freelancer, you can only earn a limited amount. Even if it a major chunk of six digits for your package, it makes you eligible to file for Income tax returns under Various Income Tax Rules. An ITR 4 form can be used to report your income and file your returns properly. Make sure to keep your invoices and statements handy for they become an essential proof while declaring the former.

Read About: Advance Tax

Undisclosed Advantages

There are several benefits of filing income tax under a freelancing income too. The amount disclosed by you is a valid proof of income that is considered by all government bodies. These statements can help you accrue a loan if need be. However, you would still be accountable for scrutiny in case the records do not match. Thus, it is recommended that you pay your taxes diligently as per the income tax rules and file for returns as eligible.

What Counts As Expenses?

Bloggers can claim compensation for their valuable assets such as laptops, cell-phones, furniture etc., and this can be shown as a valid expense proof. However, you can only claim the depreciative value of the asset in a single financial year. Say for example you purchase a table which has a life expectancy of 5 years for 45000 INR.

You would be allowed to claim only a proportional amount of that entire expense over an assessment year. Therefore, the expense for the table for the current year that can be claimed by you would be roughly around 8000, and this can continue up to the next five years. The government, however, has a list of all the assets and their depreciative value.

How Do I Save TDS and Income Tax?

There are many ways you can save your taxes. Income tax rules for 80C make you eligible for exemptions up to 1.5 lakhs. Invested amounts in fixed deposits, mutual funds, PPF, LIC premiums etc. account for eligibility under tax saving schemes.

In case you live in a rented property, you can claim house rent allowance as a valid rebate solution. For business owners, various expenses for your such as domain hosting, design expenses, rent expenses, electricity, water, telephone and other utilities, salary to employees, can be considered as valid deductions under income tax rules.

Various online income tax calculators can help you analyse the total amount of income tax that you are supposed to pay. Proper analysis and organised plans can go a long way in managing your finances efficiently without much hassle.

Read About: How to Link Your Aadhar and Pan Number

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