ITR filing: Key rules for freelancers, F&O traders

The July 31 deadline for filing income tax returns (ITR) for the 2025-26 financial year (assessment year 2026-27) has passed, yet many taxpayers still have time to meet the deadline. Individuals with income from a business or profession, who are not required to undergo a tax audit, can still file their returns until August 31. This rule also applies to salaried individuals who earn money from futures and options (F&O) trading, social media content creation, or other side jobs.

To avoid issues, taxpayers must reconcile their records with the Annual Information Statement (AIS), Form 16, and Form 26AS. Freelancers should compare their receipts with bank statements, invoices, and GST returns, if they have one. F&O and intraday traders should verify turnover, profit or loss calculations, and broker statements with their return disclosures.

In case of any discrepancies, the Income Tax Department can flag minor mismatches, potentially leading to inquiries or delays in processing. Therefore, it is essential to ensure accurate records. For salaried individuals with income from additional sources, such as trading or freelancing, it is crucial to disclose these under the correct categories.

Salaried taxpayers must disclose their salary income under the 'Salary' schedule and any additional income under 'Profits and Gains from Business or Profession'. F&O income should be reported as non-speculative business income, while intraday trading income should be classified as speculative business income.

When choosing between ITR-3 and ITR-4, consider the nature of income, total earnings, and whether presumptive taxation is applicable. Presumptive taxation under Sections 44AD, 44ADA, or 44AE of the Income Tax Act may be advantageous for eligible professionals and businesses. Always consult with a tax professional to ensure compliance with the most suitable provisions.