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
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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.
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.
