10 common tax mistakes Indian freelancers and creators make

Most tax trouble for freelancers and creators doesn't come from complicated situations. It comes from a handful of simple mistakes, repeated every year. Here are the ten we see most often, and how to avoid each one.

1. Treating TDS as your final tax

When a client deducts 10% TDS, it's easy to assume the tax is "done". It isn't. TDS is an advance on your tax, at a flat rate. If your income puts you in a higher slab, you owe more. If it's lower, you may get a refund, but only if you file a return to claim it.

Fix: add up your gross income (before TDS), work out the real tax, and treat TDS as tax already paid.

2. Not checking Form 26AS and AIS

Your Form 26AS and Annual Information Statement (AIS) show the income and TDS the department already knows about: client payments, interest, high-value transactions. If your return doesn't match, you can get a notice.

Fix: before filing, compare both with your own records. If a client deducted TDS that isn't showing, ask them to file or correct their TDS return. You can only claim TDS that appears against your PAN.

3. Skipping advance tax

Salaried people have tax deducted monthly. Freelancers often have none, and many simply pay everything when they file. If your tax after TDS is ₹10,000 or more, that means interest at 1% a month for every missed instalment, plus more interest after March.

Fix: pay advance tax on 15 June, 15 September, 15 December and 15 March. If you use presumptive taxation, one payment by 15 March is enough.

4. Forgetting that foreign income counts

AdSense, Upwork, Fiverr and payments from foreign clients are fully taxable in India if you live here. They also count towards your GST registration limit, even though you don't charge GST on exports.

Fix: include every foreign credit at the rupee amount that reached your bank, and keep the FIRC or bank advice for each one.

5. Ignoring gifted products and barter deals

A phone, a trip or a skincare kit given in exchange for content is income at its fair value. If the value from one brand crosses ₹20,000 in a year, the brand must also handle 10% TDS on it.

Fix: keep a simple list of everything received in barter, with its value, and include it in your income. Products you return after the campaign generally don't count.

6. Mixing personal and business money

Running everything through one account makes it hard to prove what was income and what wasn't. Transfers from family, refunds and loans can look like income, and business expenses get lost among personal spending.

Fix: use one account for work if you can. If you can't, label transactions as you go, so you're not guessing in July.

7. Never comparing the two tax regimes

The new regime is the default, and for many freelancers it's cheaper. But if you have large deductions (80C investments, health insurance, home-loan interest), the old regime can still win. Picking without comparing can cost thousands.

Fix: run your numbers through both regimes every year before filing. Note that people with business income can't switch back and forth freely, so make the choice deliberately.

8. Using presumptive tax when you're not eligible

Presumptive taxation (taxing 50% of receipts, section 44ADA, now section 58) is popular because it's simple. But it's only for the professions listed in the law, such as legal, medical, engineering, architecture, accountancy, technical consultancy and IT. Content creation and influencing aren't clearly on that list.

Fix: if you're a creator, ask a CA before using it. If you're an eligible professional, compare it with your actual expenses first.

9. GST slip-ups

The common ones:

• Charging GST on invoices without being registered (you can't)
• Not registering after crossing the limit
• Skipping returns in months with no income. Nil returns are still due, and late fees add up
• Not filing a fresh LUT each financial year for foreign clients

Fix: check your turnover against the limit regularly, and once registered, file every return on time.

10. Filing late, or not e-verifying

Missing the due date means a late fee and interest on any unpaid tax. And a return you've filed but not e-verified doesn't count as filed at all.

Fix: set a reminder for the due date announced each year, and e-verify straight after filing with Aadhaar OTP or net banking.

Bonus: not keeping records

If you ever get a question from the department, the person with invoices, bills and bank records has an easy time. The person without them doesn't.

Fix: keep invoices you raised, expense bills, TDS certificates (Form 16A), FIRCs and tax challans for at least a few years. A folder per financial year is enough.

Kamai's free tools catch most of these automatically: the income tax calculator compares both regimes and counts TDS correctly, and the advance tax calculator tells you what to pay on each date.