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Taxation of Freelance Service Provider

N S D (Freelance Expert (Chegg India Pvt Ltd)) (17 Points)

18 August 2021

Hello there,

I'm a Freelance expert working in Chegg India Pvt. Ltd. which is an e-learning company, it is mainly into providing student services. So basically I solve queries for students through our platform for which I get paid per query or the question I've answered. Company is referring me as "Independent Contractor" in employment contract and experience letter too. And the TDS is being deducted @ 10% u/s 194J.

My questions are: (for AY 2021-22)

(1) Under which ITR am I supposed to file ITR-3 or ITR-4 (I used and currently using ITR-4 earlier)
(2) If ITR-4 then can I opt for 44AD (I filed earlier using 44AD only) or 44ADA

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10 Replies

CMA Poornima Madhava (CMA) (13097 Points)
Replied 18 August 2021

1) ITR4 is the appropriate form if you opt for 44ADA else ITR3 2) 44ADA (not 44AD) would apply provided you are covered under the specified profession for 44ADA

debora M (BUSINESS DEVELOPMENT MANAGER) (1697 Points)
Replied 18 August 2021

When you earn an Income from a ‘Service’ – Service Tax is usually required to be paid by You – the provider of service and you have to recover this tax from the receiver of such services. Add it to the total value of your service and the client has to make the payment inclusive of this tax. Current service tax rate is 12.36%. Let’s say your total billing to your client is Rs 75,000. Service tax on it shall be Rs 9270. You invoice your client Rs 84270 and Rs 9270 will be service tax collected from the client and which has to be deposited to the government.

Akash Munne (29 Points)
Replied 19 August 2021

Is service tax still existing ?? isn't it covered under GST law ?? just curious to know

N S D (Freelance Expert (Chegg India Pvt Ltd)) (17 Points)
Replied 25 August 2021

Thanks for the reply, but in 44ADA they didn't mention Freelancing as a specified profession? But in 44AD they did mention Educational and other services, so just out of curiosity and doubt!

CMA Poornima Madhava (CMA) (13097 Points)
Replied 25 August 2021

If you hire people and get this done, then 44ad would apply. Since this is not the situation, 44ada is apt.

Freelancing literally is not specified. But the point to consider here is that the freelancing in what subject. For instance, if related to accountancy, it is convered under profession for 44ada.

N S D (Freelance Expert (Chegg India Pvt Ltd)) (17 Points)
Replied 25 August 2021

Thanks for the reply again, But my freelancing is not related to accounting/auditing. It is just like teaching or solving doubts of students in a specified subject (for example mine is Operations Management). So my work basically involves solving queries or clarifying doubts in Operations Management subject. So 44AD or 44ADA?

CMA Poornima Madhava (CMA) (13097 Points)
Replied 25 August 2021

Accountancy was just an example to explain. As I understand, teaching is not covered under specified profession to opt for 44ada. Also 44ad is for business and teaching in your case is not a business.

So ITR 3 would be the ideal form I think