Yes it is true. Let's see where both of these individuals start paying their taxes.
Employees:
Employees can use the benefit of at least Rs. 2.50 lakhs (the basic exemption limit) and 1.50 lakhs (80C deduction).
This means an employee can get away without paying a rupee of tax if their income is Rs 4 lakhs.
Freelancers:
Among other things, freelancers are entitled to a flat deduction of 50% on their income. They have to pay tax on the remaining 50%.
For example, if the freelancer has earned 8 lakh rupees in last financial year, 50% i.e., 4 lakh rupees is exempt and only the other 4 lakh is taxable.
And even in the remaining 4 lakh, the calculation is the same as the employee (no tax). More deductions if rebate u/s 87A is applicable (but that applies to the employee too). I think you know where this is going.
Essentially, a freelancer earning a whopping 8 lakh rupees can get away without paying a single penny in taxes.
Conclusion:
Thus, an employee starts paying taxes from 4 lakhs, whereas the freelancer starts paying taxes from 8 lakhs. This is the tax benefit we are talking about.
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