Tax exemption to freelancers

Freelancers and professionals may have reason for cheer as the Budget reduces their tax headache. It has widened the scope of presumptive taxation under section 44AD of the income tax Act to include legal, medical and engineering professionals, among others, with annual income of up to Rs 50 lakh.

The earlier limit was Rs 25 lakh. Professionals in the fields of architecture, accountancy , technical consultancy and interior decoration can now avail of the scheme and pay tax at 50% of gross receipts.

The FM said taxpayers opting for presumptive taxation would have to remain in it for five years. “Further, if he (taxpayer) does not offer the income as per the said scheme in any of the five years, he shall not be eligible to claim the benefit under the scheme for next 5 years,“ Jaitley said.freelancer

For enterprises, the FM proposed to increase the turnover limit for presumptive taxation scheme to Rs 2 crore, “which will bring big relief to a large number of assesses in MSME category“. The scheme was earlier available for small and medium enterprises (non-corporate businesses) with turnover not exceeding Rs 1crore.