Freelancing means nobody deducts the right tax for you. Clients may cut TDS, foreign clients won't, and you have to pay advance tax yourself. The good news: India's presumptive schemes let most freelancers pay tax on a fixed share of their receipts with no bookkeeping, and under the new regime many pay nothing at all. Here's how it works in tax year 2026-27.
How freelance income is taxed
Freelance income is "profits and gains of business or profession", not salary. That has three consequences:
- You get no ₹75,000 standard deduction; that's only for salary and pension.
- You can deduct genuine business expenses, or use the presumptive scheme instead.
- The same slabs and rebate apply as for everyone else, under whichever regime you choose.
| New regime slab (2026-27) | Rate |
|---|---|
| Up to ₹4 lakh | 0% |
| ₹4–8 lakh | 5% |
| ₹8–12 lakh | 10% |
| ₹12–16 lakh | 15% |
| ₹16–20 lakh | 20% |
| ₹20–24 lakh | 25% |
| Above ₹24 lakh | 30% |
Plus 4% health and education cess. Resident individuals with taxable income up to ₹12 lakh get a rebate that brings the tax to zero.
Presumptive tax: the 50% rule
Under the presumptive scheme for professionals (section 44ADA in the old Act, section 58 in the Income-tax Act, 2025), you simply declare 50% of your gross receipts as income. The other 50% is assumed to be expenses, whatever you actually spent. You don't need to maintain books of account or get an audit.
You can declare more than 50% if your profit is higher. Declaring less than 50% takes you out of the scheme: you then need proper books and, if your income is above the basic exemption limit, a tax audit.
Who can use it
The 50% scheme is for resident individuals (and partnerships, but not LLPs) in specified professions:
- Software, IT and technical consultancy, engineering and architecture
- Legal, medical, accountancy and company secretary services
- Interior decoration, and film artists (actors, directors, editors, music and similar)
Receipt limit: ₹50 lakh a year, or ₹75 lakh if cash receipts are no more than 5% of the total. Payments by bank transfer, UPI or card don't count as cash.
Writers, designers, marketers, translators and content creators usually aren't in the specified list. They can generally use the presumptive scheme for business (old section 44AD, also now in section 58) instead: income is taken as 6% of receipts received digitally (8% for cash), for turnover up to ₹2 crore (₹3 crore if cash is 5% or less). It's even lower than 50%, but it comes with a five-year lock-in if you leave it. Which scheme fits your work is worth confirming with a chartered accountant once.
Zero tax up to ₹24 lakh of receipts
Under the new regime, a resident's taxable income up to ₹12 lakh is tax-free because of the rebate. If you're on the 50% scheme and have no other income, receipts of ₹24 lakh give taxable income of exactly ₹12 lakh, so the tax is zero. Even if clients deducted TDS, you get it all back as a refund when you file.
Go above that and tax starts from the ₹4 lakh slab, not from ₹12 lakh, so it rises quickly. Just above ₹12 lakh of income, marginal relief caps the tax at the amount by which your income exceeds ₹12 lakh.
Freelancer Income Tax CalculatorEnter your receipts and see your tax under both schemes and regimes.Worked examples
Ananya, software developer, ₹18 lakh from Indian clients
All payments come by bank transfer. Under the 50% scheme her income is ₹9 lakh. Under the new regime that's below ₹12 lakh, so her tax is ₹0.
Her clients deducted TDS of ₹1.2 lakh during the year. She files her return on time and gets the full ₹1.2 lakh refunded.
Karan, IT consultant, ₹40 lakh from US clients
Income under the 50% scheme: ₹20 lakh. New regime tax: ₹20,000 (4–8 lakh) + ₹40,000 (8–12 lakh) + ₹60,000 (12–16 lakh) + ₹80,000 (16–20 lakh) = ₹2,00,000, plus 4% cess = ₹2,08,000.
Foreign clients don't deduct Indian TDS, so Karan owes all of it as advance tax. Because he uses the presumptive scheme, the whole amount is due by 15 March. Paying even a few days late means interest of 1% a month.
TDS deducted by clients
| Payment | TDS rate |
|---|---|
| Fees for professional services | 10% |
| Fees for technical services, call centres | 2% |
| If you haven't given your PAN | 20% |
| Foreign clients | No Indian TDS |
Clients deduct TDS only when they pay you more than ₹50,000 in a year (old section 194J, now section 393). Individuals hiring you for personal work usually don't deduct it. Check the TDS against your annual tax statement and AIS every quarter; you get credit only for what the client actually deposited.
TDS on Professional Fees (194J)Work out the TDS on an invoice and the amount you'll actually receive.Advance tax: dates and penalties
If your tax for the year, after TDS, is ₹10,000 or more, you must pay it in advance during the year rather than at filing time.
| Due date | Regular taxpayers (cumulative) | Presumptive scheme |
|---|---|---|
| 15 June | 15% | — |
| 15 September | 45% | — |
| 15 December | 75% | — |
| 15 March | 100% | 100% |
Miss a date and you pay interest of 1% a month on the shortfall (old sections 234B and 234C, now sections 424 and 425). Pay online through the income tax portal's e-Pay Tax option and keep the challan.
Advance Tax CalculatorSee how much advance tax to pay by each date.When to keep books instead
Presumptive tax is simple, but it isn't always cheapest. If your real expenses are more than half your receipts (say you pay subcontractors, rent an office or buy costly equipment), you may pay less by declaring actual profit. Then you need:
- Books of account: invoices, bank statements, expense bills and a simple ledger.
- Depreciation on laptops, cameras and other assets instead of deducting the full cost at once.
- A tax audit if your profit is below 50% of receipts and your income is above the basic exemption limit, or if receipts cross the audit threshold.
Common expenses freelancers claim: a share of home rent and electricity used for work, internet and phone, software subscriptions, co-working fees, travel to clients, professional courses, and bank or platform fees.
Filing your return
- Collect all invoices, bank statements, and the TDS shown in your AIS and annual tax statement.
- Choose the return form. So far, presumptive income has been filed in ITR-4 (Sugam) if total income is up to ₹50 lakh, and actual profit in ITR-3. The portal picks the right form for tax year 2026-27 based on your answers.
- Choose your regime. The new regime is the default. With business or professional income you can opt for the old regime, but you can switch back only once, so decide carefully.
- File by 31 August if you don't need an audit (the Finance Act 2026 moved non-audit business and professional returns from 31 July; salaried people still file by 31 July). Audit cases have a later date.
- E-verify within 30 days, using Aadhaar OTP or net banking.
Foreign income and GST are separate topics. If you invoice clients abroad or earn over ₹20 lakh, read GST for freelancers.
Freelancer Invoice GeneratorCreate professional invoices with GST or LUT details.Frequently asked questions
How much tax does a freelancer pay in India?
It depends on your profession and regime. A specified professional on the 50% presumptive scheme with ₹24 lakh of receipts and no other income pays zero tax under the new regime in 2026-27, because taxable income stays within ₹12 lakh. At ₹40 lakh of receipts, income of ₹20 lakh gives tax of ₹2,08,000 including cess.
What is section 44ADA called now?
From tax year 2026-27, the Income-tax Act, 2025 replaced the 1961 Act. Presumptive taxation for professionals (old 44ADA) and for small businesses (old 44AD) are both now in section 58, with the same limits and rates.
Can a graphic designer or content writer use 44ADA?
Usually not, because these are not in the list of specified professions. They can generally use the business presumptive scheme (old 44AD) instead, which treats 6% of digital receipts as income. Confirm with a chartered accountant if your work is borderline, for example technical consultancy.
Do freelancers get the ₹75,000 standard deduction?
No. The standard deduction is only for salary and pension income. If you also have a salaried job, you get it on the salary part.
Is TDS deducted on payments from foreign clients?
No Indian TDS applies when a foreign client pays you. Platforms or the client’s country may withhold their own tax in some cases; you may be able to claim credit for it in India under a tax treaty.
What happens if I miss advance tax?
You pay simple interest of 1% a month on the shortfall until you pay. It is not a penalty that stops you filing, but it adds up, so pay as soon as you notice.
Do I need to register a business to freelance?
No. You can freelance as an individual using your PAN and a regular savings or current account. You may need GST registration if your turnover crosses the threshold, and some states require a shop and establishment registration for an office.
I have a salary and freelance income. How is it taxed?
Both are added together and taxed at your slab rate. Your employer’s TDS covers only the salary, so pay advance tax on the freelance part. Under the new regime, both share the same ₹12 lakh rebate limit.