If you are doing moonlighting along with your salaried job, then you should calculate your second job i.e. freelance income on a quarterly basis.
Moonlighting is one of the highlighted topics trending in major IT firms and new age Tech Companies or Startups. While many companies have been soft about doing two jobs simultaneously, many companies have openly opposed it. However, here we will talk that if you do another job (Moonlighting) under the Moonlight policy, you will have to pay extra income tax.
What is moonlighting?
Moonlight is a common concept in the employment sector and has made headlines in India once again after severe backlash from many companies. Moonlighting is when an employee takes a second or a side job apart from the primary employment.
Tax on side income
Now let us talk about the tax on side income from moonlighting. If you are a salaried employee, then you have to fill Income Tax Return Form ITR-1. Whereas if your income is from freelancing work, then you have to fill ITR-4 form, because this income is considered as Income from Profession.
Expenses on which you can save tax
Never make the error of declaring your entire income as income when you make money from freelancing. People who work for themselves as independent contractors may also list some of their expenses. expenses required to work as a freelancer. Your total income from freelancing should not, however, exceed Rs 50 lakh for this.
This may include data charges, reasonable cost of using electricity, subscription charges for software and other tools, etc. An individual can claim income up to 50% of his total freelancing income as taxable income.
How much will be the tax on moonlighting?
If you are doing moonlighting along with your salaried job, then you should calculate your second job i.e. freelance income on a quarterly basis. After paying the credit of TDS, if you have any liability according to the tax slab, then only you will have to pay extra income tax, failing which no tax will have to be paid.
One more thing, if your total income is Rs 28 lakh as in the above example, then you will also get the benefit of exemption under 80C and 80D as per Income Tax Law.
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