Taxation of Freelancers and Professionals: Presumptive Scheme and More

Freelancing in India (designers, developers, writers, consultants, doctors, architects) comes with real tax choices. The biggest is the presumptive scheme, which lets you pay tax on 50% of your receipts with no detailed accounts. Under the Income-tax Act, 2025, it has moved from section 44ADA to section 58, with the same limits and rate.

Is freelance income “business” or “profession”?

Freelance income is taxed under “Profits and gains of business or profession”, not as salary. It doesn’t matter whether clients are in India or abroad. The difference matters for the presumptive scheme:

• Specified professions qualify for the 50% scheme: legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration, film artists, company secretaries, information technology, and other notified professions.
• Other freelance work (for example some content or marketing services) may be treated as business, where the presumptive rate is 6% or 8% of turnover (under the same section 58).

The 50% presumptive scheme (section 58, formerly 44ADA)

Example: a UX designer receives ₹30 lakh, all by bank transfer. Under the scheme, taxable income is ₹15 lakh. Under the new regime the tax is about ₹1.09 lakh including cess. Without the scheme, they would need full books, and actual expenses would rarely be as high as 50%.

Declaring less than 50%? You can, but you must keep books of account and may need a tax audit if income is above the basic exemption limit. You would file ITR-3.

Not using the scheme: deductible expenses

If you keep proper books, you can deduct genuine expenses such as:

• a home office share of rent and electricity
• internet and phone
• laptop, camera and software (depreciation on equipment)
• co-working space, travel to clients, professional subscriptions
• payments to sub-contractors, with TDS where applicable

TDS on your fees

Indian businesses paying you professional or technical fees deduct TDS (typically 10% for professional fees) above a threshold. This shows in your AIS / Form 168 and is credited against your tax. Foreign clients don’t deduct Indian TDS.

GST for freelancers

• Registration threshold: aggregate turnover above ₹20 lakh (₹10 lakh in special category states). Export turnover counts towards the threshold.
• Foreign clients (export of services): generally zero-rated. Export without paying GST under a Letter of Undertaking (LUT) filed each year, with payment received in convertible foreign exchange (or INR where RBI permits).
• Indian clients: 18% GST on most professional services once you are registered.
• Platforms like Upwork or Fiverr may have their own GST implications. Get advice.

Advance tax and compliance calendar

Foreign income and remittances

• Keep FIRCs / FIRAs (foreign inward remittance certificates) from your bank or payment platform.
• Money received via PayPal, Payoneer or Wise is still taxable in India when you are resident.
• Report foreign clients’ payments as professional receipts. There is no separate “foreign income” head for a resident freelancer.

Frequently asked questions

Can a salaried person also use the presumptive scheme for side income?
Yes, if the side income is from a specified profession. You would file ITR-4 (if eligible) or ITR-3.

Is the ₹75 lakh limit per year?
Yes, it applies to gross receipts each tax year.

Do I need to register for GST if all my clients are abroad?
If your total turnover (including exports) is above ₹20 lakh, yes. You can then export without GST under a LUT.

Is the old regime or new regime better for freelancers?
Usually the new regime, because freelancers have few deductions. If you choose the old regime with business income, you must file the opt-out form before the due date, and you can switch back only once.

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Freelancer or independent professional? Garvita Jain & Co. handles presumptive tax, GST registration and LUTs, advance tax and your ITR. Contact us here, or at contact@garvitajainandco.com or +91 98678 16597.

This article is general information based on the law as of October 2026 and is not professional advice.

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Sources

Official

• Income Tax e-filing portal
• GST portal (registration, LUT)

Professional / CA publications

• TaxGuru, Section 58 presumptive taxation under Income-tax Act 2025
• TaxGuru, Presumptive taxation simplified: 44AD, 44ADA and 44AE merged
• CAalley, Presumptive taxation for professionals under the new Act
• CA Alok Kumar, Presumptive taxation: sections 58 and 61