Self-employed ITR form is for those individuals who sell his or her services to different employers without binding a full-term contract with any of them. Under “Profit and gain from Business or Profession” Income Tax Act, 1961, levies tax on the income of self-employed individuals.

In the act, self-employment is referred to as a profession. The business is defined in the act as, “any trade, commerce or manufacture or any adventure or concern such as trade, commerce or manufacturing”. However, the profession is not defined in the act. The profession also includes vocation, as mentioned in the law.

Examples of occupations that fall under the category of profession/vocation include –

To calculate income to file ITR for Self-employed, the Income Tax Act offers two options –

• Calculate the taxable income on a presumptive basis without claiming any deduction for expenditures
• Claim all the costs and calculate the real profit

In case you select the second option, make sure you have proper books maintained of account to submit as proof. Also, if your income exceeds Rs.50 lakh, you need to get your account books audited from a certified official. 

Also Read: Why Should You File ITR on Time?

• ITR for self-employed allows them to claim several tax deductions from the gross taxable income
• They include costs incurred towards the profession, interest on loans to carry out the business, insurance for and depreciation of salaries to employees, assets and day-to-day office expenses
• Expenditures such as internet bill, electricity bill, telephone bill and travelling costs are also allowed to be deducted from the gross income
• Remember that while filing ITR for self-employed, there must be legal proof of the expenses for every such deduction
• Recently, the Indian Government has offered a choice of tax-filing to the self-employed professionals (those having an income of less than Rs. 50 lakh in a year) by way of a presumptive tax system. It means the assessee has the choice of filing his taxes either in a conventional way or through the presumptive tax method
• According to the presumptive tax method, self-employed professionals are allowed to claim expenses at the rate of 50% of the gross income, and the income tax is calculated on the outstanding 50% percent while adding any interest income to it
• In this method, you do not need to show any proof of expense separately, and you are not required to maintain accounting records.Income tax for freelancers in India also applies the same taxation scheme. You can look at freelance tax India for more detailed information

Also Read: How to File ITR Form 4?

· In case you are wondering which ITR form for self-employed must be used, ITR for self-employed individuals can be filed through ITR-4.

· In ITR 4, a percentage of the receipts are counted as net income, and tax will be paid on that, instead of claiming business costs against those receipts and paying tax on the balance.

The income earned by self-employed individuals is logged under ‘income from business or profession’. It also includes income tax for business and ITR for businessman

The process to e-file ITR for self-employed individuals is by using the internet at your convenience and time. The process to e-file ITR for self-employed is a quick and easy way. You can file ITR for self-employed from the comfort of your couch. E-filing ITR for self-employed can also help in saving money as you would not have to hire an individual to file ITR.

Follow the steps below to file ITR for self-employed online:

Step 1: Log into the official e-filing website (https://incometaxindiaefiling.gov.in).