As a self-employed person, you can claim several deductions from the total taxable income. Some of these claims include expenses in carrying one’s profession, interest on a loan to carry out the profession, insurance of assets, depreciation of professional assets, salaries to employees, daily office expenses, and all sundry expenses related to conducting his business. Also, expenses such as internet bill, telephone bill, electricity bill, and travel expenses can be deducted from the total income. However, to claim this deduction, valid proof of expense is a must.
If self-employed professionals choose the presumptive tax method to fil ITR-4S, then 50% of the total income can be exempted from so the income tax is calculated on the remaining 50%.
In the case of ITR-4S, you can claim deductions under Sec 80C, 80CCD, 80D etc. post 50% deduction of total receipt. So, knowing the investment that falls under these sections is important to effectively plan your tax liability.
With amendments in Angel Tax, start-ups that raise capital up to Rs 25 crore can claim tax benefits. Above this, the government has also changed the definition of start-up and now firm with Rs 100-crore annual turnover will be considered as a start-up.
So, if you plan well in advance then you can save a substantial amount.