Tax Saving Tips for Freelancers: Shreyaa Kapoor's Guide to Section 44ADA

Are you a freelancer in fields like interior decoration, technical consulting, engineering, or the arts, wondering how to save on taxes? Shreyaa Kapoor, a finance influencer, shares valuable insights on how independent professionals can leverage Section 44ADA for tax benefits.

Understanding Section 44ADA for Freelancers

Section 44ADA is a boon for freelancers in specified professions, including accounting, legal, medical, architecture, and various roles in the film industry. This provision allows professionals to pay tax on only 50% of their gross receipts, provided their total income doesn't exceed Rs. 75 lakhs. This effectively reduces their tax liability by deeming half of their earnings as profit.

Eligibility and Benefits

To be eligible for Section 44ADA, your gross receipts should not exceed Rs. 75 lakhs in a financial year. By opting for this scheme, you can lower your taxable income significantly, as only 50% of your receipts are considered taxable income.

Additional Deductions

Besides the benefits of Section 44ADA, freelancers can still claim deductions under various sections like 80C for investments in ELSS or PPF, 80GG for rent, and for medical insurance. For example, if your gross receipts are Rs. 15 lakhs, you can declare Rs. 7.5 lakhs as profit under 44ADA, and further reduce your taxable income with deductions under 80C, 80GG, and for medical insurance.

Claiming Rent without HRA

A common concern for self-employed individuals is how to claim rent without having HRA (House Rent Allowance). Section 80GG comes to the rescue, allowing freelancers to claim deductions for rent paid, even without HRA.

Other Tax Deductions

Freelancers can also explore other deductions like those for education loans, home loans, etc., depending on their individual situations. Shreyaa Kapoor has created detailed content on these topics to help freelancers navigate their tax-saving options.

Bringing Taxable Income Down

By strategically using these deductions, freelancers can potentially bring their taxable income down to Rs. 5 lakhs, making them eligible for a tax rebate under Section 87A, resulting in zero tax liability.

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Freelancers have various avenues to save on taxes, and understanding provisions like Section 44ADA can make a significant difference. Shreyaa Kapoor's insights provide a roadmap for independent professionals to reduce their tax burden effectively.