Freelancers should keep in mind – Income Tax Rules

There is a slight difference between freelancer and consultants.

A freelancer is someone who does not work under someone for a long period of time, in technical terms he/she is his own boss.

Some freelancers work independently and some take clients or a company or a temporary agency but not for a long time.

There is a minor difference between freelancers and consultants in relation to income tax rules.

A person who is working as a freelancer cannot use some of the things which a salaried person can do.

Freelancers are allowed to get when they are working on a tenure for the company.

In the income tax rates, they are same for both freelancer as well as consultants.

5 points which will explain the income tax rules for a freelancer a little bit better:

  • They cannot claim a certain amount of deduction which salaried individuals can do.
  • Deductions under some Sections like  80C, 80CCD, 80D, 80TTA etc are only provided to individuals working as a consultant or a freelancer.
  • Consultants can claim money for the shortest portion as well but freelancers cant.
  • Freelancers cannot claim any personal expenses but consultants can claim money related to work expenditure.
  • Income as a consultant is taxed under the head “Profits and Business or Profession” but not in the case of freelancers.

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