I work as a freelancer and earn income from multiple clients online. While filing my Income Tax Return in India, I am confused—should freelancers file ITR-3 or ITR-4, and what factors decide which one is correct for me?
That’s a great and very relevant doubt many freelancers get stuck at this stage because the choice of ITR form depends on how you report your income, not just the fact that you are freelancing.
ITR-3 for Freelancers:
You should file ITR-3 if you want to declare your actual income and expenses.
Here, you can deduct business expenses like internet bills, laptop depreciation, software subscriptions, rent for your workspace, etc.
It requires you to maintain proper books of accounts if your income crosses certain limits.
ITR-4 (Presumptive Scheme) for Freelancers:
You can choose ITR-4 if you want to go for the Presumptive Taxation Scheme under Section 44ADA.
In this case, your taxable income is considered as 50% of your gross receipts, and you don’t need to maintain detailed books.
This option is simpler, but it works only if your gross receipts are up to ₹50 lakh in a financial year.
Which One Should You File?
• If your freelance income is less than ₹50 lakh and you don’t want the hassle of tracking expenses → ITR-4 (easy and straightforward).
• If your income is above ₹50 lakh OR you want to claim actual expenses (because they are high) → ITR-3.
Quick Example :
• You earn ₹20,00,000 from freelancing.
• If you file ITR-4 (44ADA) → Taxable income = ₹10,00,000 (50% assumed).
• If you file ITR-3 → Suppose actual expenses = ₹8,00,000. Then taxable income = ₹12,00,000 (₹20,00,000 – ₹8,00,000).
So, the choice can actually affect your tax liability.
For official guidance, you can check: