Money Guide for Freelancers

Start with the deadline that catches people out. Advance tax is due through the year, not at filing.

When does a freelancer have to pay advance tax?

In four instalments, by cumulative percentage of your estimated tax for the year.

• 15 June: 15 per cent
• 15 September: 45 per cent
• 15 December: 75 per cent
• 15 March: 100 per cent

Miss them and interest runs. There is one important exception. If you opt for presumptive taxation as a professional, the tax department states you must pay 100 per cent of advance tax on or before 15 March. One instalment, not four. That is a genuine simplification and it is the main reason many freelancers choose the scheme.

The mechanics of estimating and paying are on our advance tax page.

Should a freelancer use presumptive taxation?

For most, yes. Under the presumptive scheme for specified professions, you declare income at 50 per cent of gross receipts. You are not required to maintain books of account for that profession. Your actual expenses may well be under 50 per cent, so this often cuts both tax and paperwork.

The limits, as published by the Income Tax Department for ITR-4 filers:

One caution. Section numbers changed under the Income-tax Act, 2025. The portal pages still cite the older numbering. Follow the rule, not the number you read in an old article. More on the scheme is on presumptive taxation.

When does a freelancer need GST registration?

Freelance work is a supply of services. So the services threshold applies, not the goods one.

CBIC states the limit as ₹20 lakh of aggregate turnover, and ₹10 lakh in Manipur, Mizoram, Nagaland and Tripura. That is the position as published on 1 May 2019, effective 1 April 2019. Check the current notification before you register.

Two points that get misreported constantly. First, aggregate turnover is all your receipts, not the income you keep. Second, working for clients in another state does not by itself force registration. CBIC lists suppliers of services with turnover up to ₹20 lakh making inter-state supplies as exempt from obtaining registration. Many freelancers register far too early because of this myth.

Registering does have upsides. Business clients often prefer a GST invoice. And exporting services can be done without paying tax, under a letter of undertaking. But registration brings monthly or quarterly returns, forever. Do not take it on lightly. See GST registration for the process.

How do you budget on an income that swings?

Treat every payment as three buckets, on the day it lands.

The uncomfortable part is the third one. Most freelancers spend in the good months and borrow in the thin ones. Paying yourself a flat salary is the single habit that separates the two outcomes.

What do you lose by not being on a payroll?

Four things, and each has a replacement you must buy yourself.

What records should you keep?

Keep it simple, but keep it. One business bank account, separate from personal. Every invoice numbered in a single series. A note of the date each invoice is paid, not just raised. Contracts or emails confirming scope. Your Form 26AS and AIS, checked each year against your own invoice list. Our guide to Form 16, 26AS, AIS and TIS explains that reconciliation.

Clients deduct TDS on professional fees. That credit appears against your PAN. If you declare less income than the TDS trail suggests, expect a query.