Freelance vs employment - income tax

Hi,

- What is the nature of service?

- Freelancing. Further we can discuss over the call.

Thanks

Hi,

Hope you are doing well !

You can save money as a freelancer.

Thanks & Regards,

Payal Chhajed

Hi

Having a professional income as a freelancer is favourable considering the tax liabilities.

Further, for eligible professionals, 44ADA is available and not 44AD.

Firstly make sure that your profession is eligible under 44ADA. Let us know the nature of your services.

Hi,

As a freelancer, you can save more money.

The below-mentioned professions can avail benefits of Presumptive Taxation Scheme under Section 44ADA:

Engineering

Legal

Architectural profession

Accountant

Medical

Technical consultant

Interior business

Please make sure that your services are covered in any of the above professions.

Hi,

It will be basically be dependent on the nature of service that you intend to provide.

Having said that, in general, a professional income as a freelancer will be more favourable than the employment.

Regards,

Nikhil.

Yes you have correctly mentioned that you can save more tax by being a freelancer rather than being an employee because in our country the hard working employee are asked to pay more tax as they are not provided proper deduction for their income.

So you can show income u/s 44ADA @50% of total receipt but it's not that easy that you can just show 50% as expense you need to have incurred that much of expense.

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

Thank you

Hi,

If the gross receipt is around 21-22 lacs, then from income tax perspective its beneficial to go by freelancing model.

However, please note that since your turnover will exceed 20 lacs, GST will be applicable in case of freelancing model. However, if you select employee model, GST will not be applicable.

Now if your employer is ready to bear GST, then it's better to go by freelancing otherwise employment model will be more beneficial

So even if you prefer to be a freelancer, you would be paying taxes under the presumptive basis 8 % on turnover.

IN my opinion, working as a freelancer would be far more beneficial as against employment. The benefits of opting freelancing vis-a-vis employment are :

- under salary, taxes would be deductible at regular intervals and you would be also falling under 30% slab. The tax rate under presumptive scheme is less . For eg. Suppose your income is 22 lac your tax on presumptive basis would be around 1.76 lakhs whereas under salary it would be around 4.70 lacs, unless salary is structured appropriately.

- No burden to maintain books and auditing.

-Higher cash flows as tax is only payable by 15 MArch.

Hi

You can save more by opting freelancing .

Freelancing will be taxed under business and profession head,Its your choice to opt for presumptive taxation scheme or pay tax under normal taxation. In both the cases,situation will be in your favour as compared to employment.

Hope it helps