How to File ITR (Income Tax Return) for Students & Freelancers

How to File ITR (Income Tax Return) for Students & Freelancers

"I don't earn enough to pay tax, so why should I file a return?"

This is a common myth. Filing an ITR is not just about paying tax; it's about claiming refunds and building financial history. If you are a student doing paid internships or a freelancer earning gig money, this guide is for you.

Why File ITR (Even with Zero Tax)?

1. Get Refund (TDS): Companies often deduct 10% TDS (Tax Deducted at Source) when paying freelancers/interns. If your total income is below taxable limit (₹7 Lakhs), you can get 100% of that money back only by filing ITR.
2. Visa Processing: Countries like US/UK/Canada ask for 3 years' ITR as proof of ties to home country.
3. Loans: Banks require ITR as income proof for car/home loans.
4. Carry Forward Losses: Made a loss in stocks? File ITR to carry it forward and adjust against future profits.

Which ITR Form to Choose?

• ITR-1 (Sahaj): For Salary income + One House Property + Other sources (Interest). Use if you are just an intern with a stipend.
• ITR-2: If you have Capital Gains (Stocks/Mutual Funds sales) or Foreign Assets.
• ITR-3: For Business income / Freelancers (Regular method).
• ITR-4 (Sugam): The Best for Freelancers. Presumptive Taxation Scheme (Section 44ADA).

For Freelancers: The Magic of Section 44ADA

If you are a freelancer (Code, Design, Writer, Tutor), the government assumes your "profit" is only 50% of your revenue.

• Scenario: You earned ₹10 Lakhs.
• Benefit: You declare profit as ₹5 Lakhs (50%).
• Tax: You pay tax only on ₹5 Lakhs. Since income up to ₹7 Lakhs is rebate-free (Old Regime ₹5L / New Regime ₹7L), you pay ZERO Tax.

Eligibility: Professionals (Engineers, Doctors, Architects, Interiors, Technical Consultants).

Step-by-Step Filing Process (Self-File)

You don't always need a CA. The new Income Tax Portal is user-friendly.

1. Login: Go to incometax.gov.in. Login with PAN.
2. AIS/TIS: Check "Annual Information Statement." This shows what the govt already knows you earned (TDS, Bank Interest, Stock sales).
3. Select Form: Choose ITR-1 or ITR-4 based on profile.
4. Fill Details:
   • Gross Total Income: Enter salary/freelance income.
   • Deductions (80C): Enter LIC/PPF investments (Old Regime).
   • TDS: Verify the TDS deducted matches your Form 26AS.
5. Verify: Using Aadhaar OTP.
6. Wait: Refund usually credits in 20-45 days.

Old Regime vs. New Regime (FY 2025-26)

• New Regime (Default): No deductions allowed (80C, HRA gone). Lower tax rates. Tax-free up to ₹7 Lakhs (Standard Deduction included for salaried). Simple.
• Old Regime: High tax rates but allows deductions (80C, HRA, Medical). Tax-free up to ₹5 Lakhs.
• Verdict: For most students/freelancers with income < ₹7 Lakhs, New Regime is better and simpler.

Important Dates

• Financial Year (FY): April 1 to March 31. (When you earn).
• Assessment Year (AY): The year after FY. (When you file).
• Deadline: Usually July 31st.
• Late Fee: ₹1,000 to ₹5,000 if missed.

Key Takeaways

1. Check 26AS: Before filing, always check Form 26AS/AIS to see how much Tax has already been cut from your payments.
2. Declare EVERYTHING: Savings account interest, stock dividends, stipend. AI tracks everything now.
3. ITR-4 is Gold: Freelancers save massive tax using Section 44ADA.
4. File Nil Return: Even if income is 0, having the document helps in future financial life.

Frequently Asked Questions

Is Stipend taxable?

Yes, it is treated as "Income from Other Sources" or "Salary" depending on the contract. If total income > ₹3L (New Regime basic exemption), you must file.

Dealing with Crypto tax?

Flat 30% tax on profit. No slabs. No deductions. 1% TDS on every trade. This is separate from your slab tax.

Can I file myself?

Yes, for simple cases (Salary/Freelance). If you have complex capital gains or foreign income, hire a CA or use apps like ClearTax.

Financial literacy starts with tax. Explore more money management guides on Sproutern