Freelancers and social media influencers are also liable to pay tax on the income earned by them. This means they are also required to file income tax return (ITR). As per Income Tax Act, any income generated by an individual by implementing their manual or intellectual skills is considered as ‘’profit and gains from business and profession". From this perspective, freelancing and social media influencing is treated as a business and profession.
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The due date for filing the income tax returns for freelancers and social media influencers for FY 2022-23 (AY 2023-24) is July 31, 2023.
Who are freelancers and social media influencers
Freelancers are those who are self-employed and have the freedom to choose their work, projects and companies they would like to be associated with. Various consultants and professionals, such as software developers, bloggers, content writers, tutors, web designers, fashion designers, etc. qualify as freelancers.
On the other hand, social media influencers are those who generate income from sponsorships and ad money.
Applicability of taxes
Freelancers are required to pay income tax as per the applicable rates. They can also claim deductions depending on which tax regime they opt for. Additionally, they can file tax under the Presumptive Taxation Scheme under Section 44ADA of the Income Tax Act, 1961. This means they can pay tax on freelance income on only half of their gross annual income, provided the total income for the year is less than Rs 50 lakh.
Here are the tax rates applicable to freelancers below 60 years of age for FY 2023-24:
| Income Slab | Old Tax Regime | New tax Regime | New Tax Regime |
| (until March 31, 2023) | (From April 1, 2023) | ||
| Rs 0 - Rs 2,50,000 | - | - | - |
| Rs 2,50,000 - Rs 3,00,000 | 5% | 5% | - |
| Rs 3,00,000 - Rs 5,00,000 | 5% | 5% | 5% |
| Rs 5,00,000 - Rs 6,00,000 | 20% | 10% | 5% |
| Rs 6,00,000 - Rs 7,50,000 | 20% | 10% | 10% |
| Rs 7,50,000 - Rs 9,00,000 | 20% | 15% | 10% |
| Rs 9,00,000 - Rs 10,00,000 | 20% | 15% | 15% |
| Rs 10,00,000 - Rs 12,00,000 | 30% | 20% | 15% |
| Rs 12,00,000 - Rs 12,50,000 | 30% | 20% | 20% |
| Rs 12,50,000 - Rs 15,00,000 | 30% | 25% | 20% |
| >Rs 15,00,000 | 30% | 30% | 30% |
(Source: Cleartax)
Social media influencers are also taxed in the same manner as freelancers.
To arrive at the payable tax, the taxpayer has to determine the income from various sources and deduct the expense. Sometimes, employers deduct TDS before paying the freelancers. Hence, the TDS should be included while computing the tax liability.
Deductions available
| Sections | Exemptions available |
| Section 80 C | Exemption up to Rs 1.5 lakh on investment towards ELSS, ULIP, insurance, FDs, etc. |
| Section 80 CCD | Investment in central government schemes |
| Section 80 CCF | Exemption of up to Rs 20,000 on investment in government-notified infrastructure bonds. |
| Section 80 D | The premium for health insurance |
| Section 80 DD | Exemption up to Rs 1.5 on treatment for disabilities |
| Section 80 E | Education loan |
| Section 80 G | Donations to charitable trust and relief funds |
(Source: Groww)
Standard deduction of Rs 50,000 is not applicable to freelancers while filing ITR. However, those who have a salaried job along with freelancing work can claim standard deduction on the salary income if they opt for the old regime of taxation. For claiming expenses as a deduction, freelancers will have to ensure that the expenses are directly related to the work and spent during the tax year.
ITR forms
A freelancer needs to opt for ITR-3 or ITR-4 to file Income Tax Return (ITR).
Salaried individuals who earn extra income in a financial year from freelancing work outside their job will also have to opt for an ITR form similar to that filled by businessmen or professionals.
Filing process
Freelancers and social media influencers can calculate the gross income of the given financial year and calculate the expenses and deductions that can be claimed. Further, they should select the appropriate form, i.e. either ITR-3 or ITR-4 and fill all the required details on the form by logging into the Income Tax e-filing portal.
(Edited by : C H Unnikrishnan)
First Published: Jul 20, 2023 2:57 PM IST
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