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Pay 10,000/month for 10 years, Get 1,65,805/Year* for next 15 years.
ARN. No. KLI/23-24/E-BB/1201
Features
Ref. No. KLI/22-23/E-BB/999
Unravel the tax responsibilities of freelancers and gig economy professionals in India. Gain valuable insights to streamline your financial planning.
Updated On: 28th July, 2023
Indian youth is moving towards the journey of entrepreneurship. And this journey got fueled during the time of the pandemic. With the rise of the work-from-home culture, people started earning in the comfort of their place. This further encouraged service startup ideas and opened doors for young entrepreneurs.
The gig workforce in the economy is expected to grow up to 23.5 million workers by 2029-30. Therefore, estimating and evaluating the income from this sector is crucial. Hence, the government levied taxes on freelancers and gig workers, similar to salaried employees and business owners.
A Gig economy consists of temporary workers without a contract between the employer and the worker. Generally, it consists of services that are flexible, independent and unlike full-time employment.
Instead of being employed by an organisation or company, freelancing is considered as self-employment. Freelancers are people providing services on a contract or project basis and, thus, considered self-employed.
Every Indian earning more than ₹3,00,000 is liable to pay income tax annually. This similar rule is applicable to freelancers and gig workers. You must refer to the following table to understand the tax slabs for freelancers and gig workers under New Tax Regime:
Income Tax Slab |
Income Tax Rate |
Up to ₹2,50,000 |
NIL |
₹2,50,001 - ₹5,00,000 |
5% above ₹2,50,000 |
₹5,00,001 - ₹7,50,000 |
₹12,500 + 10% above ₹5,00,000 |
₹7,50,001 - ₹10,00,000 |
₹37,500 + 15% above ₹7,50,000 |
₹10,00,001 - ₹12,50,000 |
₹75,000 + 20% above ₹10,00,000 |
₹12,50,001 - ₹15,00,000 |
₹1,25,000 + 25% above ₹12,50,000 |
Above ₹15,00,000 |
₹1,87,500 + 30% above ₹15,00,000 |
TDS is the amount deducted from payments such as salary, commission, rent, interest, or professional fees. The person who gets the payment at the point of sale, must pay the tax. This minimises tax evasion as the tax is collected at the moment of payment. While submitting ITR, freelancers can claim the deducted TDS and obtain information from Form 26AS. In addition, TDS is deducted at the rate of 10%, and freelancers can only deduct TDS if they have been audited for the last financial year. However, freelancers can only be audited if the annual gross receipt exceeds ₹50 lakhs, and TDS won’t be applicable in such a scenario.
As freelancers and gig workers provide services to various entities and people, it sometimes becomes confusing to understand their tax liability. However, the government has streamlined the approach to compute taxes and deductions under Income Tax Act. Thus, it has become easier to evaluate income, taxes, and claim deductions for the same. Moreover, except for senior citizens and super senior citizens, the income tax slab is the same for every taxpayer.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Pay 10,000/month for 10 years, Get 1,65,805/Year* for next 15 years.
ARN. No. KLI/23-24/E-BB/1201
Features
Ref. No. KLI/22-23/E-BB/999
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
