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Practice

Tax Guide

What is the difference between income from business and income from other sources for a freelancer?

Key mapping

Freelancers/consultants whose income is professional in nature (doctor, CA, designer, IT professional) should typically report as 'Income from Profession' (PGBP — Profits and Gains of Business or Profession). Not 'Income from Other Sources'.

Explanation

Freelance income is income from business or profession under the IT Act — not 'Income from Other Sources' (which is a residual category for interest, dividends, etc.). For professionals (doctor, CA, advocate, engineer, designer, IT developer), the correct head is 'Income from Profession' under PGBP. This allows deduction of all business expenses — rent, internet, equipment, professional indemnity insurance. Presumptive taxation under §44ADA (§59 in IT Act 2025) is available if gross receipts ≤ ₹75 lakh — declare 50% as profit, no books required. Filing ITR-4 with presumptive OR ITR-3 with full accounts. Verify on the income-tax portal before filing.

Related terms and sections

freelancerconsultantPGBP44ADASection 59profession incomeITR-4presumptive

Use this in practice

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Related sections

IT Act 2025 Section Mapper →

All section references are sourced from the Income Tax Act 2025 (official gazette, incometaxindia.gov.in) and cross-referenced against CBDT's comparative statement. Always verify on the official portal before filing. This page is for reference only and does not constitute legal or tax advice.