Answer

ITR

Freelancer with capital gains or high total income

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  1. Facts

    ITR-4 allows only small long-term gains on listed equity under Sec 112A (up to ₹1.25 lakh for AY 2026-27) and total income up to ₹50 lakh. With other capital gains or higher income, a Sec 44ADA freelancer files ITR-3.

  2. Provisions and law

    • Sec 44ADA, Income-tax Act 1961 (now Sec 58, Income-tax Act 2025)Resident professionals with receipts up to ₹50 lakh (₹75 lakh if cash receipts are within 5%) can declare 50% of receipts as income
    • Sec 139(1), Income-tax Act 1961 (now Sec 263(1), Income-tax Act 2025)Return due date: 31 July for most individuals, 31 August for non-audit business or profession, 31 October for audit cases

  3. Analysis

    You can still use the presumptive scheme inside ITR-3. Example: deemed income ₹15 lakh from foreign clients plus a short-term gain of ₹80,000 on equity funds; ITR-4 is not allowed, so file ITR-3 with Sec 44ADA in Schedule BP and the gain in Schedule CG. Choosing the wrong form can lead to a defective return notice.

  4. Conclusion

    1. List all income including capital gains
    2. Check ITR-4 limits
    3. Use ITR-3 if any limit is crossed
    4. Show presumptive income and capital gains in their schedules

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Freelancer return with foreign clients, Sec 44ADA

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