What are expenses for which a freelancer cannot claim deductions?

According to Income Tax Act, a freelancer cannot claim deductions for the following expenses: -

1. Income Tax paid by a freelancer.
2. For his/her payment towards any expense made by a freelancer in cash, if it is more than Rs. 20,000 on a single day to any person, then deductions cannot be claimed for such an amount.
3. If a freelancer pays an amount which is more than Reasonable Fair Amount to his relatives, then the unreasonable portion cannot be claimed for deduction.

4. If any payment is made by a freelancer to any individual on which TDS is not deducted, then 30% of the amount of payment may not be allowed to the freelancer.

When freelancers need an audit?

Tax Audit for freelancers

If the Professional receipts of a freelancer is more than Rs. 25 lakhs during the financial year, he/she will be subject to get his/her books of accounts audited by a Chartered Accountant.

Which ITR Form should be used by freelancers to file ITR?

 Freelancers are supposed to fill either ITR 4 or ITR 3 for filing their Income-tax return.

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