Can all freelancers take advantage of presumptive taxation scheme ?

As far as I know, there is no specific rule that freelancers cannot opt for presumptive taxation scheme. Any person having business or professional income can choose to go for presumptive income scheme, provided having satisfied the following conditions:

1. In case of business, the gross receipts (sales) for the concerned financial year should not exceed Rs. 2 crores (Sec 44AD).

2. In case of profession, the gross receipts for the concerned financial year should not exceed Rs. 50 lakhs (44ADA).

As freelancers use their skills for providing services to the customers, they usually come under the category "profession". Hence, they can opt for presumptive taxation, if their gross receipts are reported to be below Rs. 50 lakhs. When one choose this presumptive income scheme, they should report their income equal to or above 50% of their gross receipts. If suppose the gross receipts is above Rs. 50 lakhs or the net profit is less than 50% of the gross receipts, they are liable for tax audit.

For taxpayers opting for presumptive taxation scheme, ITR 4 should be filed. You will not be required to provide the list of expenses incurred. The gross receipts and the net profit and other necessary details such as business name, business code should be filled therein. With this, your balance sheet should also be filled. You can consult a chartered accountant or equally qualified people or TRP to file tax returns.

A freelancer can also take the advantage of a presumptive taxation scheme provided he is fulfilling the criteria mentioned. The Income-tax Act has framed the presumptive taxation scheme under sections 44AD, Section 44ADA and Section 44AE.
A person adopting the presumptive taxation scheme can declare income at a prescribed rate. In such a case, he need not maintain books of account. He need not get the audited carried out.
A person who adopts the presumptive taxation scheme is considered to have claimed all deduction
of expenses. He can't claim at any cost more than 50% of deductions as expenses. That means he has to declare a minimum of 50% profit.
To avail of this benefit, the following criteria are to be fulfilled.
1. The gross sales for the concerned financial year in his business should not exceed Rs. 2 crores (Sec 44AD).
2.The gross receipts for the concerned financial year should not exceed Rs. 50 lakhs (44ADA) for a professional,
A freelancer can use this scheme as a professional. provided that his income is less than 50 lakhs in that financial year and the deductions as expenses are not more than 50% of his receipts.
ITR 4 is to be filed. It is advisable to take the help of a tax consultant who can guide properly.

The basic idea of providing a presumptive scheme of taxation, to those businesses where total turnover is less than Rs 2 crore, is to give the relief from maintaining the account and getting them audited. So, this is a convenient scheme for many people who earn income from business either from the digital or non-digital transactions. Any person who wants to take advantage of this scheme should note that his business income should not be related to earnings by way of any commissions or from agency of life insurance or from plying, hiring or leasing goods carriages. These areas are excluded from the domain of presumptive tax which is covered under under section 44AD of the income tax act.

The scheme works in a very simple fashion and the profit on digital transactions are taken at a rate of 6% while the profit from non-digital transactions is assumed at 8% and then that profit is considered as income under the head 'Business and Profession' and is taxed as per the existing tax rates.

Let us understand it in numerical form by taking a case of a person whose annual turnover through digital transactions is Rs 60 lakh and through non digital transactions is Rs 80 lakh. As his total turnover, that is the volume of the business, is Rs 60 +80 = Rs 140 lakhs and that is less than the limit of Rs 2 crore so he is entitled to go for presumptive tax scheme. In this case his income from his business would be considered as --> 6% of 60 lakh + 8% of 80 lakh = Rs 10 lakh. So he can file his IT return showing a business income of Rs 10 lakh.

The person entitled and willing to go for presumptive tax need not to pay his advance tax every quarter as is the case with the normal tax payers. But he has to pay his advance taxes by 31st March of the relevant year and then reflect it in his IT return which is generally required to be submitted by the month of July.