Tax Exemptions for Freelancers and Self Employed

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Tax Exemptions for Freelancers and Self Employed

Tax exemptions for freelancers, making the way a bit easier for the self-employed

Freelancers tax calculation

The concept of self-employment is one of the most celebrated in the job world. The major advantage of this genre is that it allows the economic development of the individual or the group while also generating several opportunities for others. 

Freelancers are the professionals who have taken the self-employment genre to various aspects that conventionally had full-time employment options. Freelancers allow the business to reduce the usual logistics and employee retention costs. This is particularly important for the small and growing businesses. This increases the investment window for the business and has a positive effect on the overall economy of the country. 

The subsequent Indian governments have been taking constant initiatives in order to enhance the trend of self-employment amongst the Indian citizens. Over the course of years, there have been a series of tax exemptions that have been forwarded to freelancers to encourage more of them to come into the fold. Some of the tax exemptions as well as important tax insights that are meant for the freelancers are listed below.

  • The income tax for the freelancers does not come under regular salary module, and thus the applicant can fill ITR 4 form for filing up the returns.
  • The amount earned by freelancing needs to be looked closely to understand the taxable portion. The taxable income shall be calculated after deducting the expenses like internet connection charges, telephone costs involved in client interaction, Tax has to be calculated over this calculated amount instead of the total amount received through the invoicing.
  • There are several sections of the income tax act that qualify the freelancers for tax exemptions.
  • Exemptions for qualified investments under Section 80 C are applicable for the freelancing professionals like bloggers and SEO experts.
  • Section 80 D and other sub-segments of the section allows several exemptions instead of the expense incurred in the medical treatment of self and those dependents on the freelancer.
  • Section 80 E allows the professional to receive tax exemptions on the grounds of education loan repayment.
  • Section 80 GG of the income tax act allows the professionals to claim the tax benefits over the payment of rent to an accommodation.
  • Several other tax exemptions are also enlisted under the same section like on the amount donated to a charitable trust and political parties etc.
  • Other tax exemptions allowed to the freelancers are in accordance with the salaried sections. The exemptions like on the interest of the amount in a savings account are applicable as well for the freelancers.

The logic behind encouraging freelancers is that it enhances the industrious nature of the eligible professionals by giving them proper incentives in terms of taxation benefits. This would be instrumental in breaking the flawed belief that everyone needs a conventional job to succeed. Freelancing puts deep emphasis on the inhibitive ability of the professional to make out the maximum of the available opportunities.

The taxation benefits go a long way in making the freelancers believe in their work which helps exponentially in increasing their productivity and hence the incremental contribution to the development of the economy and the nation. 


By | 2017-03-15T03:26:26+00:00 March 15th, 2017|Income Tax, Latest News, TAX|Comments Off on Tax Exemptions for Freelancers and Self Employed

About the Author:

CA Lukesh Sethi is owner and founder of, Having more than 5 years experience in taxation and corporate laws serving many clinets in practice. Can be reached at
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