• Freelance Translator should file which ITR

I am a freelance translator/interpreter getting income from overseas clients through PayPal.
My net income is 75% of Gross receipt, which is approx. 5 Lakhs. 
I am getting a mixed opinion from professionals for ITR-3 and ITR-4. 
Am I eligible to file ITR-4 under 44ADA with code 16019. 
Further, if not eligible to file ITR-4, then do I need to maintain books of account for filing ITR-3.
Do I need GST registration as well? 
Please guide in detail.
Asked 2 years ago in Income Tax

Dear Sir,

Yes, you can opt the section 44ADA.

For freelancers and professionals, Section 44 ADA provides that 50 percent of the total gross receipts [or a higher sum as declared by you] of a financial year will be taken as profit and tax will be applicable on that amount. However, your total gross receipts should not be more than Rs 50 lakh.

Benefits from this scheme:

a. 50 percent of the total gross receipts [or a higher sum as declared by you] of a financial year will be taken as profit and tax will be applicable on that amount.

b.You don’t have to maintain accounting records

d. You don’t have to pay advance tax

e. You don’t have to get your accounting records audited

f. You can file your tax return in ITR-4 a much shorter and simpler form than ITR-3

In case the turnover/income of exporting services, exceeds 20 lakhs, you will be compulsorily required to take registration under GST even if exports are zero-rated under GST.

For example, your total gross receipts are Rs 25,00,000 per annum. According to Section 44 ADA, your taxable income will be presumed Rs 12,50,000 i.e. 50 percent of the total gross receipts, and tax will be levied on it as per the rates given in the relevant tax slabs.

Thanks & Regards,

Payal Chhajed

Payal Chhajed
CA, Mumbai
4896 Answers
91 Consultations

5.0 on 5.0

No no you are free to file ITR 4 using the provision of section 44ADA since your total receipt is below 50 lakh and your net income is above 50% it's easy and advisable to file ITR 4, if you don't have any capital gain income or income from more than one house property because in that case you will have to file ITR 3 but in that case also you don't need to maintain book and fill all details as in ITR 3 for professional income you will choose not maintaining books of accounts and provide income above 50%.

Since you are a freelancer providing service in other states also I guess then in that case I think GST is mandatory even if you are below 20 lakh threshold limit because as per GST one providing inter state service need to get registered under GST irrespective of turnover.

Hope you find it helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Naman Maloo
CA, Jaipur
3668 Answers
40 Consultations

5.0 on 5.0

It should be covered under other professional services - 16019.

Payal Chhajed
CA, Mumbai
4896 Answers
91 Consultations

5.0 on 5.0

There is no specific code for freelancer so I think you must show your income under 16019 i.e. other professional service that is the most suitable code.

Hope you find the above information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Please rate the answer

Thank you

Naman Maloo
CA, Jaipur
3668 Answers
40 Consultations

5.0 on 5.0

Dear Sir,

Yes, you are eligible for ITR 4 under 44ADA with code 16019.

Karishma Chhajer
CA, Jodhpur
2272 Answers
15 Consultations

5.0 on 5.0

Hi,

There is a lot of debate around that and there can't be a right or wrong answer until or unless we get any clarification from cbdt.

However, considering your case, since amount involved is not that big, you can consider the option of presumptive taxation and file ITR 4. However, I would advise you to keep all the documents with you so that in case if query arises, you are in a position to prepare your p&l.

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

Yes you can consider the option of presumptive taxation and file ITR 4

In case the turnover of export services exceeds 20 lakhs, you will be compulsorily required to take registration under GST even if exports are zero-rated under GST.

Nikhil Khanna
CA, Mumbai
1428 Answers
19 Consultations

4.8 on 5.0

You may use profession code 16019.

Nikhil Khanna
CA, Mumbai
1428 Answers
19 Consultations

4.8 on 5.0

Hi,

- Section 44ADA is not applicable to you as freelance translator/interpretator is not covered under specified profession. Code 16019 is for section 44AD (i.e. business category). You need to file ITR-3. As the gross receipts are less than Rs.1cr so requirement of Audit is not applicable to you. File ITR-3 with balance sheet and profit& Loss account.

Thanks

Vivek Kumar Arora
CA, Delhi
3800 Answers
242 Consultations

5.0 on 5.0

Hi

Yes you can opt for 44ada under code 16019.

Gst registration will be mandatory in case your gross receipts exceeds 20 lacs.

Swati Agrawal
CA, Mumbai
1146 Answers
7 Consultations

5.0 on 5.0

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