Presumptive tax filing services for Freelancers

The Presumptive Taxation Scheme is a simplified tax regime introduced by the Income Tax Act that allows freelancers, professionals, and small businesses to calculate and pay income tax on only half of their gross annual income. It is designed to reduce the compliance burden on small taxpayers.

Freelancers, professionals, and small businesses with a total annual turnover or gross receipts of up to Rs. 2 crores can avail of the Presumptive Taxation Scheme. However, professionals like doctors, lawyers, architects, etc., are not eligible for this scheme.

Under Section 44AD, businesses can declare income at a prescribed rate of 8% (6% for digital receipts) of the total turnover, while under Section 44ADA, professionals can declare income at 50% of the total receipts.

The scheme simplifies tax filing for small enterprises and independent contractors by eliminating the need for meticulous bookkeeping. It also results in a lower tax obligation than under the standard tax system and eliminates the requirement for audit.

No, professionals like doctors, lawyers, architects, etc., cannot avail of the Presumptive Taxation Scheme. They are required to maintain proper accounts and file tax returns accordingly.

For Fiscal Years 2023-24 (Academic Years 2024-25), the revised limits are as follows:

- Sec 44AD: For small business - Rs. 3 crores.
- Sec 44ADA: For professionals like doctors, lawyers, engineers, etc. - Rs. 75 lakhs.

To file your income tax return under the scheme, determine your eligibility, calculate your taxable income as per the prescribed rates, and prepare ITR Form-4. Provide details of your income and claim deductions, if applicable. Finally, file the ITR online.

No, the Presumptive Taxation Scheme is optional. Taxpayers can choose to file their tax returns under the regular tax regime if they prefer.

Documents such as PAN card, Aadhaar card, bank account details, receipts for business expenses, and details of gross receipts and taxes paid are essential for filing income tax returns under the Presumptive Taxation Scheme.

The Presumptive Taxation Scheme allows small taxpayers to pay income tax on only half of their gross annual income. This relief is provided under Sections 44AD and 44ADA of the Income Tax Act. To be eligible, your total income for the year must be less than 50 lakhs.

Section 44AD is applicable to businesses with a turnover of up to Rs. 2 crores (Rs. 1 crore for professionals), allowing them to declare income at a prescribed rate of 8% (6% for digital receipts) of the total turnover without maintaining detailed books of accounts. Section 44ADA is applicable to professionals like doctors, lawyers, and architects, allowing them to declare income at a prescribed rate of 50% of total receipts without detailed bookkeeping.

ITR-U stands for Updated Income Tax Return. It was introduced in the Union Budget 2022 and allows taxpayers to correct any errors or omissions made while filing their income tax returns within two years after the filing. Taxpayers can use an updated return to rectify mistakes like missed deadlines, incorrect income declarations, or choosing the wrong head of income.

You can file ITR-U unless your original return falls into any of these categories: Nil or loss return, reduces total tax liability, leads to a refund, or if search and seizure or prosecution proceedings have been initiated.

You can address errors like incorrect income reporting, choosing the wrong tax rate, declaring income under the wrong head, and reducing carried forward loss or unabsorbed depreciation.

You must choose the tax regime (New Tax Regime or Old Tax Regime) within the due date according to Section 139(1). Once the due date has passed, the regime cannot be changed. Different rules apply for choosing the regime in different ITR forms.

For filing an updated return within 12 months from the end of the relevant assessment year, an additional 25% of the aggregate tax and interest due must be paid. For filing between 12 and 24 months, an additional 50% of the aggregate tax and interest due must be paid.

The total income tax liability is calculated as follows: Payable Tax + Interest + Payable fees for non-filing of Income Tax (if any) + Payable amount as Additional Tax (For taking benefit of Section 139(8A)). This liability is then reduced by TDS/TCS/Advance Tax/Tax Relief, etc., to calculate the net tax liability.

To file ITR-U, you need to update the relevant ITR form (ITR-4) using a JSON file available on the Income Tax website. Fill in Part A and Part B of the ITR-U form, generate a JSON file, and then proceed to submit it online on the Income Tax portal.