Salary vs Freelance Calculator
The same gross amount, taxed as a salary and as professional income.
A cheque or draft that is not account-payee counts as cash for this test. Only account-payee instruments and electronic modes fall outside it.
- Gross receipts
- ₹30,00,000.00
- Expenses deemed allowed, without proof
- ₹15,00,000.00
- Ceiling that applies to you
- ₹75,00,000.00
- Income you are taxed on
- ₹15,00,000.00
- Deemed expenses
- ₹15,00,000.00
- Tax
- ₹1,09,200.00
- Kept from presumed income
- ₹13,90,800.00
Both sides earn the same gross amount. The salaried side pays tax on all of it, less the standard deduction; the professional side pays tax on half of it and gets no standard deduction, because presumptive income is business income rather than salary. The tax gap is real but it is not the whole picture: an employee also gets an employer's provident fund contribution, gratuity, and an employer NPS contribution that survives into the new regime at up to 14% of basic plus dearness allowance — none of which a freelancer has. Against that, a freelancer keeps the deemed expenses whether or not they were actually spent. Treat this as the tax comparison it is, not as a full comparison of the two working lives.
FY 2026-27 (AY 2027-28). Presumptive taxation for professionals now lives in section 58 of the Income-tax Act 2025, which merges the old sections 44AD, 44ADA and 44AE; the 50% presumption and the ceilings are unchanged. The ceiling is ₹50,00,000.00, rising to ₹75,00,000.00 when cash receipts are 5% or less of the total. It is open to a resident individual, HUF or partnership firm — not an LLP or a company — carrying on a notified profession: legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, company secretary, information technology, authorised representative or film artist. A general "consultant" outside those categories does not qualify, even where tax was deducted under section 194J, and that is the most common wrong claim. Two things in your favour: advance tax is a single instalment by 15 March, which caps deferment interest at 1% for one month instead of the four-instalment schedule; and unlike section 44AD for businesses, there is no five-year lock-in, so you may opt in and out year to year. Declaring less than 50% while your income exceeds the exemption limit means keeping books and being audited. Once you are in, the presumed figure is final — no separate claim for expenses or depreciation on top.
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Independent · No commissions · No fund-house data — how the numbers are computed
How it works
The same amount of money is taxed very differently depending on how it reaches you. As a salary it is taxed in full, less a standard deduction of ₹75,000 in the new regime or ₹50,000 in the old one. As professional receipts under presumptive taxation, half of it is deemed to be expenses and you are taxed on the other half, with no standard deduction because business income does not get one.
The gap that opens up is large and real, but it is a tax comparison rather than a comparison of the two working lives. An employee also receives an employer's provident fund contribution, gratuity after five years, and an employer NPS contribution that survives into the new regime at up to 14% of basic pay. A freelancer has none of those, carries the risk of unpaid invoices, and must find their own health cover. Against that, they keep the deemed expenses whether or not the money was actually spent.
Salaried tax = tax(gross - standard deduction). Freelance tax = tax(50% of gross receipts). The difference is the tax gap.Both sides are computed under the same regime so the comparison is like for like. The presumptive side is capped at the ₹50 lakh ceiling, or ₹75 lakh where cash receipts are at most 5% of the total; above that the scheme is unavailable and the comparison no longer holds.
Frequently asked questions
Is freelancing really taxed less than a salary?
On the same gross figure, usually yes, because presumptive taxation treats half your receipts as expenses without asking for proof while a salary is taxed almost in full. What the comparison leaves out is everything an employer pays for on top of salary — provident fund, gratuity, an NPS contribution, often health cover — none of which a freelancer receives. The tax gap is real; it is not free money.
Do I need to raise invoices with GST as a freelancer?
GST registration is a separate question from income tax and turns on your turnover and the nature of your supplies, not on whether you use presumptive taxation. This calculator deals only with income tax. Where GST does apply, it is collected from your client and paid onward rather than being your income, so it should not form part of the gross receipts you enter here.
Which regime should a freelancer choose?
Usually the new one, for the same reason as most salaried people: presumptive income already excludes half your receipts, so there is less left for deductions to work on, and the old regime's narrower slabs then cost more. If you have a large home-loan interest claim or substantial health premiums it is worth checking both, which the regime toggle on this page lets you do.
Does the freelancer pay advance tax differently?
Yes, and it is a genuine advantage. A presumptive filer pays advance tax in a single instalment by 15 March rather than in four instalments across the year, so the deferment interest under section 234C is capped at 1% for one month instead of accruing across three earlier dates as well. The ₹10,000 threshold and the section 234B ninety percent test still apply as normal.