Zero-Tax Window
Earn up to ₹7 lakh gross with zero tax
What is This Hack?
Earn up to ₹7 lakh gross (₹3.5 lakh after 50% presumptive) with Section 87A rebate under new regime for complete tax-free freelancing income
How It Works
This is the perfect entry point for new freelancers: earn up to ₹7 lakh gross income with ZERO tax liability. Here's the math: Section 44ADA allows 50% presumptive taxation, so ₹7L gross = ₹3.5L taxable income. In the new tax regime, there's a ₹3 lakh basic exemption, making ₹50K taxable. Tax on ₹50K @ 5% = ₹2,500. BUT Section 87A rebate kicks in if total income is below ₹7 lakh - it provides up to ₹25,000 rebate. So your ₹2,500 tax gets fully rebated to ZERO. You also get to file the simplest ITR-4 form. No advance tax hassle until March 15. This is the sweet spot for beginners to freelancing.
Real Example: Beginner Freelance Writer
Situation
Kavita started freelance content writing in April 2024. She earns ₹50,000/month for 14 months = ₹7 lakh total gross receipts by May 2025. All via bank transfers (100% digital).
Without This Hack
If she didn't know about 44ADA: Would need to maintain books, track expenses, file ITR-3, pay quarterly advance tax. Complex compliance even though income is small. Likely would pay CA ₹5,000-10,000 for filing.
With This Hack
Using Zero-Tax Window: Gross ₹7L → Presumptive ₹3.5L → After exemption ₹50K → Tax ₹2,500 → Rebate ₹2,500 → Net ZERO. Simple ITR-4 filed online in 30 minutes. No CA needed. No advance tax stress. Zero compliance burden.
💰 Zero tax + ₹5-10K CA fees saved + Peace of mind
Common Pitfalls to Avoid
- Exceeding ₹7 lakh even by ₹1 means you lose the rebate completely
- Track income monthly to avoid accidentally crossing threshold
- If you earn ₹7.5L or ₹8L, tax jumps significantly - plan carefully
- The ₹7L is GROSS income (before 50% presumptive), not net
- Must file ITR even if tax is zero - filing is mandatory for claiming rebate
- This is for individual professionals only, not for partnership firms
Prerequisites & Requirements
- Must be specified professional under Section 44ADA
- Gross receipts ≤ ₹7 lakh per financial year
- 95%+ receipts via digital mode
- Choose new tax regime (default)
- File ITR-4 to claim rebate
- PAN card for ITR filing
Key Benefits
- Potential savings: Zero tax on ₹7L
- Implementation time: 1 hour
- Legal status: fully legal
- Risk level: low
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Step-by-Step Guide
Verify Eligibility
Must be a specified professional (freelancer, consultant, doctor, CA, lawyer, etc.). Gross receipts should not exceed ₹7 lakh in the financial year.
Maintain 95%+ Digital Receipts
Ensure at least 95% of your income comes via digital modes (UPI, bank transfer, Wise, PayPal, etc.) to qualify for ₹75L threshold eligibility later.
Choose New Tax Regime
The new tax regime is default from FY 2023-24. It offers ₹3L basic exemption + Section 87A rebate. Don't opt for old regime.
Track Your Income
Use a simple spreadsheet or our Freelancer Income Calculator to track monthly receipts. Alert yourself when approaching ₹7L threshold.
Pay Single Advance Tax by March 15
If you earn exactly ₹7L, technically you have ₹2,500 tax before rebate. But Section 87A rebate is applied in ITR, not advance tax. Pay nominal advance tax or pay at ITR filing (no penalty for small amounts).
File ITR-4 Before July 31
File ITR-4 (Sugam) showing gross receipts ₹7L, presumptive income ₹3.5L, basic exemption ₹3L, taxable ₹50K, tax ₹2,500, rebate ₹2,500, net tax = ZERO.