Freelancers and gig workers often miss income-tax return (ITR) filing deadlines due to several structural and practical challenges inherent in their work arrangements. One of the primary issues is irregular
and fragmented income streams. Earnings are typically received from multiple clients or platforms at different points during the year, making it difficult to determine final taxable income until close to the financial year-end.
Another challenge is tax deducted at source (TDS) being spread across multiple deductors. Tax may be deducted under different sections and reflected in Form 26AS or the Annual Information Statement (AIS) at varying times, requiring reconciliation that is often delayed.
In addition, lower compliance awareness among first-time earners plays a role. A significant proportion of gig workers are young or first-time taxpayers who may not be fully aware of filing timelines or the consequences of delays.
Delayed or missing documentation further compounds the problem. Forms such as 16A, along with invoices, expense records, and bank statements, may not be readily available or properly organised near the due date.
Taken together, these factors make timely filing administratively burdensome for freelancers and gig workers, resulting in a higher incidence of belated returns—even in cases where tax has already been deducted at source.
While irregular income and fluctuating earnings make it difficult to estimate tax liability, plan advance tax payments, and finalise return computations on time, lack of awareness remains an equally significant factor. Many taxpayers are unclear about filing deadlines, advance tax obligations, or the consequences of missing the due date, even when income details are available. In practice, delayed filing usually stems from a combination of both factors—complex income patterns and misconceptions about compliance requirements.
Common Mistakes Leading to Belated Returns
One common misconception is assuming that tax deduction equals tax compliance. Many taxpayers believe that once TDS has been deducted or advance tax has been paid, filing the income-tax return is optional or can be postponed. This overlooks the fact that return filing is a separate statutory obligation.
Another frequent error is assuming that nil tax payable or an expected refund allows delayed filing without consequences. Even where no tax is payable, timely filing is mandatory. Delays can still result in loss of carry-forward of losses, late fees, and interest, where applicable.
Taxpayers also often fail to verify the ITR within the prescribed 30-day period. Even when a return is filed on time, failure to complete mandatory verification — either electronically or by submitting the signed ITR-V — renders the return invalid. Such returns are treated as not filed, effectively pushing the taxpayer into the belated or non-filer category.
Finally, technical and procedural issues on the income-tax portal frequently cause delays. Last-minute filing exposes taxpayers to portal congestion, OTP failures, validation errors, and incomplete submissions, which can push filings beyond the due date.
Steps to Avoid Filing Belated Returns Next Year
To ensure timely filing of income-tax returns and avoid the consequences associated with belated filing, freelancers and gig workers may consider the following measures:
Freelancers should undertake quarterly reconciliation of income and TDS by requesting Form 16A from each payer and matching the details with Form 26AS and the AIS available on the income-tax portal. Doing this periodically ensures that all income and TDS credits are correctly reflected well before the due date. It also allows sufficient time for correcting mismatches and finalising tax computations in advance, significantly easing compliance under section 139(1).
Maintaining client-wise income tracking is equally important. Records should include invoice amounts and dates, TDS deducted (where applicable), and payment receipt dates and amounts.
Taxpayers should also maintain proper expense records, such as office rent, internet and phone bills, and travel expenses incurred for client meetings or work-related activities.
Equally critical is timely e-verification. Returns must be e-verified within 30 days using Aadhaar OTP or a Digital Signature Certificate (DSC). Failure to do so results in the return being treated as invalid.
Lastly, freelancers and gig workers should collect and organise deduction proofs in advance. These may include life insurance premiums, mutual fund investments, PPF contributions, home loan interest certificates, medical insurance premiums, and tuition fee receipts, among others.
(The author is a Mumbai-based chartered accountant)
