Working as a freelancer is a good option to earn. You don’t have to deal with a boss because you are your own boss. Also, being a freelancer you get the opportunity to work according to your schedule.
No need to worry about an early morning shift. But this doesn’t mean working as a freelancer is easy. Apart from the deadlines you also have to pay extra importance to your house taxes. As you don’t work in an organization, you have to take care of all your taxes by yourself.
The best way to pay your taxes is when you know the right way and proceed accordingly. In order to help you, here are the 4 smart tax saving tips for freelancers working in India.
1. Take Advantage of presumptive taxation scheme
First thing first, using this scheme will make your life easier as you don’t have to sit with your calculator to maintain any books of the account. This scheme is made available to professional listed under Section 44ADA. The main advantage of using this scheme is that it will presume your income to be 50% of your gross receipts.
Though, the scheme is only made applicable if your gross receipts are Rs 50 lakh or less.
2. Consider reporting your income as business income
Generally, your freelancing income can be considered as your business income. You might think it will not make much difference but in reality, it will allow you to deduct the expenses (depreciation on assets, office overheads, office rent, client meeting expenses, contracting costs, etc).
This way you can save a lot of money.
3. Invest the right way
Your investment influences your tax returns, but if you invest in the right way you can save a really good sum on your tax return. A right investment scheme will not only help you save tax but it will also help you save money as an investment.
Sections 80C, 80D, 80CCD, 80GG, etc are some popular deduction that you can claim to save tax.
4. File your GST (and other taxes) on time
Apart from income tax savings, a freelance can (and must) also increase tax saving with the help of GST registration. But, you have to do it on a regular basis. So that you won’t have to pay any late fees or interest.
Filling your taxes on time is most important to avoid any extra penalty.
Is that it?
Other than these tips, you also have to pay attention to other important aspects of taxes such as- the importance of book-keeping for the freelancer, other income sources, eligibility of deductions, the applicability of tax audit, etc.