December 5, 2023


Moving Forward

Are you a gig worker? 6 things to know about income tax liability, exemptions, return filing for freelancers

White-collar workers, strike tough by the Covid pandemic, noticed their gig aspirations choose flight. In excess of the earlier few of a long time, the gig work market has seen a considerable surge, fueled by people who chose to continue to be in their hometowns, in search of several income streams by means of consulting, needing adaptable schedules in excess of the 9-to-5 grind, or only striving for a improved get the job done-daily life equilibrium.
Remuneration for these white-collar gig staff hinges on aspects these as expertise, earlier get the job done top quality, skills, and workload. In scenario you are organizing to be a gig employee, Sudhir Kaushik, CEO & Founder of, in a column in ET, clarifies the tax legal responsibility, exemptions and return filing for freelancers:
How are gig staff taxed?
Gig personnel tumble under the tax guidelines relevant to self-used men and women. Any resident with a taxable revenue exceeding Rs.2.5 lakh in a fiscal year have to pay taxes according to their applicable tax bracket.
Required Tax Submitting for Gig Staff:
Yes, gig staff are obligated to file their profits tax returns by July 31 of the evaluation calendar year. Their returns need to contain income from all sources, like freelance get the job done, consulting, income, interest, and funds gains. Considering that gig employees usually deal with reduce Tax Deducted at Resource (TDS) prices, they may have to make added tax payments throughout submitting if their person tax slab is higher due to their whole earnings. To avoid tax notice, it truly is very important to align ITR particulars with Kind 26AS and AIS. If the full falls beneath the taxable threshold, refunds can only be claimed by ITR filings.
Readily available Deductions and Exemptions for Gig Workers:
Gig personnel can claim deductions for reputable small business expenses or decide for presumptive profits underneath Portion 44ADA. Prevalent deductions encompass business office rent, gear costs, vacation expenditures, and expert costs. In circumstances of notified professions, a presumptive exemption of 50% of gross receipts can be availed though declaring ‘income from business and job.’
Progress Tax Obligations:
Gig staff need to shell out advance tax if their overall tax legal responsibility on projected taxable profits exceeds Rs 10,000, net of TDS, in a economical year. This is payable on a quarterly foundation, with 15% because of by June 15, 45% by September 15, 75% by December 15, and the whole 100% by March 15 of the economical 12 months.
Being familiar with Tax Deducted at Resource (TDS):
For gig employees providing providers to clients or platforms matter to TDS deduction, it is deducted from earnings, together with income, fee, hire, curiosity, or skilled service fees. Freelancers can claim TDS even though filing their Cash flow Tax Return (ITR), and checking Kind 26AS for facts. TDS is levied at 10%, but freelancers can only deduct it if they underwent an audit in the preceding fiscal yr. Auditing is applicable if the once-a-year gross receipts exceed Rs 50 lakh, with TDS not applicable in this kind of circumstances.
GST Registration for Gig Workers:
Gig workers should register beneath the Goods and Companies Tax (GST) routine if their complete receipts surpass Rs 20 lakh in a economical 12 months (or Rs 10 lakh in specified Northeastern states). The moment registered for GST, they must adhere to the prescribed timetable for filing GST returns.