How much tax should you pay for income from freelancing and moonlighting? Details here

The term ‘moonlighting’ is used frequently in the job sector and has gained attention in India following scathing criticism from numerous businesses. When an employee does a second or side job in addition to their primary one, it is known as moonlighting. It is a hot-button issue among today’s leading IT companies and cutting-edge tech startups. Many firms have outright denied employees the chance to do two jobs at once. You will be required to pay additional income tax if you moonlight (work a second job) in accordance with the Moonlight policy.

Here is the process to calculate your income from freelancing and moonlighting?

You must complete Income Tax Return Form ITR-1 if you are a salaried employee. On the other hand, you must complete the ITR-4 form if your money comes from freelance work because it is regarded as income from a profession.

You should estimate your freelancing revenue on a quarterly basis if you have a second job in addition to your salaried employment. The only time you will need to pay more income tax after paying the TDS is if you still owe money on top of that under the tax slab; otherwise, no taxes are required.

Never make the error of listing all of your earnings as income when you generate money from freelancing. People who make their income through freelancing can also list some of their expenses associated with working as a freelancer. Your entire revenue from freelancing, however, should not be more than Rs 50 lakh. Data fees, appropriate electricity costs, software and other tool subscription fees, etc. can belong to this category.

A person can claim up to 50 per cent of their entire income from freelance work as taxable income. For instance, if your freelance income is Rs 16 lakh, you can declare Rs 8 lakh as your taxable income. Moreover, in accordance with Income Tax Law, you will additionally benefit from the exemptions under Sections 80C and 80D if your total income is Rs 28 lakh.

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