Get All Access for $5/mo

Moonlighters Are Warned Of Tax Implications: Experts Expenses incurred for the freelancing work that is spent fully and exclusively for the purpose of the work and incurred during the tax year, and which are not capital expenditure or personal expenditure of the freelance, are allowed to be deducted as expenditure

By Teena Jose

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Pexels

Income tax authorities and chartered accountants have reportedly warned the technology professionals who have an inclination towards moonlighting about the consequences related to the tax. According to the experts, the extra income earned from such activity should be declared in their tax returns.

As per reports, the tax officials will definitely come to know about the sideline jobs of an individual. Accordingly, the moonlighters have to pay taxes for the earnings made from the second job, freelance assignment or a consultancy.

"An individual or a company making a payment of more than INR 30,000 to someone in return for a contract job, (under Section 194C of IT Act, 1961) or pays a professional fee (Section 194J) are liable to deduct tax at source at the applicable rate," said R Ravichandran, principal chief IT commissioner, Tamil Nadu, Puducherry and Kerala, in a statement.

The TDS is also applicable if such payments to the same person exceed INR 1 lakh in a financial year under Section 194C. The recipient must declare such income in his or her tax returns and pay the applicable tax rate.

Expenses incurred for the freelancing work that is spent fully and exclusively for the purpose of the work and incurred during the tax year, and which are not capital expenditure or personal expenditure of the freelance, are allowed to be deducted as expenditure.

As per reports available, earnings from freelance work or consultancy services are treated as profits and gains from business or profession. Professional income under freelancing is taxable to the extent of profits made after deducting the expenditure incurred for rendering the services, and if the value of freelancing service is more than INR 20 lakh a year, GST would be charged on the services provided.

Teena Jose

News Desk Reporter with Entrepreneur India

Teena is a post graduate in financial journalism. She has an avid interest in content creation, digital media and fashion.
Business News

Apple Is Adding ChatGPT to iPhones This Week. Here's How It Works.

ChatGPT will take over questions that Siri can't answer.

Growing a Business

How to Spot Trends and Anticipate Market Shifts Before Your Competition

Discover how to identify disruptive trends before your competitors by mastering the art of anticipating market shifts. Learn strategies for staying ahead and gaining a competitive edge in business.

News and Trends

India's Logistics Cost to be Reduced to 9% Within 2 Years: Nitin Gadkari

With a focus on innovation, clean energy, infrastructure, and rural empowerment, Nitin Gadkari's vision aligns with India's aspirations to become a global economic powerhouse.

Leadership

As a Leader, Take These 5 Steps to Bridge the Gap Between Innovation and Execution

Companies that want to turn ideas into action must align their people and listen to their customers.

Business News

These Companies Offer the Best Work-Life Balance, According to Employees

The ranking is based on Glassdoor ratings and reviews.