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Estimate your annual freelance income, calculate taxes under Section 44ADA (Presumptive Taxation), and find your actual net in-hand earnings.
Software, internet, co-working space, travel, etc.
Net In-Hand Income (Annual)
That's ₹1,03,267 per month after taxes and expenses.
₹14,40,000
Total billed amount
₹7,20,000
50% of Gross Receipts
₹20,800
New Tax Regime (FY 23-24)
₹1,80,000
Actual money spent
As a freelancer, your income is treated as "Profits and Gains from Business or Profession" (PGBP). You have two main ways to calculate your taxes: the Presumptive Taxation Scheme (Section 44ADA) or Normal Taxation.
Designed for professionals (IT, design, consulting). If your gross receipts are up to ₹75 Lakhs, you can declare straight 50% of your gross income as your taxable profit. You don't need to maintain detailed expense books.
If your actual business expenses (software, internet, travel, depreciation) are more than 50% of your income, you should use normal taxation. You deduct actual expenses from gross income to find taxable profit, but you must maintain proper books of accounts.
If your gross annual receipts exceed ₹20 Lakhs (₹10 Lakhs in some states), GST registration is mandatory. You must charge 18% GST on your services. If you export services (e.g., foreign clients), it is zero-rated, but you still need GST registration and a Letter of Undertaking (LUT).
Section 44ADA is a presumptive taxation scheme for professionals (like freelancers, consultants, designers, developers). It allows you to declare 50% of your gross annual receipts as your taxable income, without needing to maintain detailed books of accounts or track actual expenses.
Professionals specified under Section 44AA(1) whose gross receipts do not exceed ₹75 Lakhs in a financial year (limit increased from ₹50L to ₹75L from FY 2023-24, provided cash receipts are less than 5%).
If your actual business expenses (software, internet, travel, depreciation on laptop) are LESS than 50% of your gross income, Section 44ADA is highly beneficial. If your actual expenses exceed 50%, you should opt for normal taxation and claim actual expenses (requires maintaining books of accounts).
Yes, if your gross annual turnover (receipts) exceeds ₹20 Lakhs (₹10 Lakhs in some special category states), you must register for GST and charge 18% GST on your services. Export of services (foreign clients) is zero-rated but still requires a Letter of Undertaking (LUT).
No, the ₹50,000 standard deduction is only available for salaried employees and pensioners. Freelancers and business owners cannot claim this deduction.