With the rise of the gig economy and digital entrepreneurship, freelancers and influencers are now a significant part of India’s workforce. However, many are unaware of how their income is taxed and what deductions they can claim. This article provides a summary of Income Tax Return requirements and break it down in simple terms.
Who is a Freelancer or Influencer for Tax Purposes?
While the Income Tax Act, 1961 does not define the term ‘freelancer’ or ‘influencer’, the same can be understood by general definitions which are as under:
- Freelancer: A freelancer is an individual who earns money on a per-job basis, usually for short-term work as an independent contractor. A freelancer is not an employee of a firm so they’re at liberty to complete different jobs concurrently for various individuals or firms unless they’re contractually committed to working exclusively until a particular project is completed. Freelancers are considered part of the gig economy. Anyone offering services independently—like writers, designers, developers, consultants.
- Influencer: Individuals earning through social media promotions, brand deals, affiliate marketing, or content monetization (YouTube, Instagram, etc.).
Both are treated as self-employed professionals under the Income Tax Act.
What Income is Taxable?
All earnings from:
- Brand collaborations
- Sponsored posts
- Affiliate commissions
- Freelance projects
- YouTube/Instagram monetization
- Online courses or digital products
This income is taxed under “Profits and Gains from Business or Profession”.
Presumptive Taxation (Section 44ADA)
The Income Tax Act provides a simple method for professionals to compute their total income which aids in the process of preparing and filing the return of income. Considering the nature of work done by freelancers, they fall under the “specified professions” listed in Section 44AA(1), which includes legal, medical, engineering, architectural, accountancy, technical consultancy, and interior decoration.
Therefore, if your gross receipts are less than ₹75 lakhs, you can opt for presumptive taxation wherein:
- Declare 50% of your income/receipts as profit (taxable).
- In such cases, no need to maintain detailed books or get a tax audit.
Eligibility Criteria for Influencers (FY 2024–25)
To opt for the provisions of Section 44ADA, an influencer must:
- Be a resident individual or partnership firm (not LLP or company)
- Have gross receipts up to ₹75 lakh, provided 95% or more of the income is received via banking channels (UPI, bank transfer, etc.). In another cases, the limit of gross receipts is up to ₹50 lakh.
- Be engaged in a profession as defined under Section 44AA(1), which includes creative and consultancy services among others.
Example
If an influencer earns ₹60 lakh in a year:
- Under 44ADA, ₹30 lakh (50%) is considered taxable income.
- Tax is calculated on ₹30 lakh, not the full ₹60 lakh.
- No need to show actual expenses like camera gear, travel, or editing software.
However, in case the actual expenses are significantly higher than 50% of the receipts, it may be better to opt out of presumptive scheme under section 44ADA and file under the regular scheme.
What Deductions Can Be Claimed if filed under regular scheme?
In case taxpayer does not opt to avail the benefit of presumptive taxation under section 44ADA of the Income Tax Act, 1961, the taxpayer can reduce the taxable income by claiming all the business-related expenses. Few examples of the same are as under:
| Expense Type | Examples |
| Office Expenses | Rent, electricity, internet |
| Equipment & Software | Laptop, camera, editing tools, Canva, etc. |
| Travel & Communication | Business travel, phone bills |
| Marketing & Promotion | Ads, website hosting, domain |
| Professional Services | CA fees, legal advice |
| Depreciation | On expensive assets like DSLR, laptop |
Which ITR Form to use?
1.ITR-4 (Sugam) – For Presumptive Taxation (Section 44ADA)
Use ITR-4 if:
- You are a resident individual, HUF, or partnership firm (not LLP)
- Your gross receipts are up to ₹75 lakh
- You are opting for presumptive taxation under Section 44ADA
- You have no foreign income or assets
This form is simpler and ideal for freelancers who want to avoid maintaining detailed books of accounts.
2. ITR-3 – For Regular Taxation
Use ITR-3 if:
- You are a freelancer not opting for presumptive taxation
- You want to claim actual expenses (e.g., rent, software, travel)
- Your income is from business or profession
This form is more detailed and requires maintaining books of accounts if your income exceeds certain thresholds.
Common Mistakes to Avoid while filing the return of income
- Not reporting income from foreign clients (PayPal, Wise, etc.)
- Ignoring TDS credits in Form 26AS
- Claiming personal expenses as business deductions
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Disclaimer: The information given in this document has been made on the basis of the tax laws prevailing. It is based on the analysis and interpretation of applicable laws as on date. The information in this document is for general informational purposes only and is not legal advice or a legal opinion. You should seek the advice of the legal counsel of your choice before acting upon any of the information in this document. Under no circumstances whatsoever, we are not responsible for any loss, claim, liability, damage(s) resulting from the use, omission or inability to use the information provided in the document.
Author Bio
i earn income from facebook. is any separate disclosure required as income comes in dollars and paid in Indian currency.