ITR: What is Moonlighting? Why is it under the investigation of the IT department
As the working world adapts to changing dynamics, the term "moonlighting" has become popular. It refers to people taking on extra work while holding their main job. This trend has become more prominent, especially during the pandemic, as remote work has allowed for additional sources of income.
Given the evolving job landscape, particularly due to job cuts and layoffs, numerous workers are seeking extra avenues to supplement their earnings alongside their primary employment.
Since moonlighting entails additional income, it has also captured the attention of tax authorities. Understanding the potential tax implications of moonlighting is crucial.
The Income Tax Department has sent out a substantial volume of notifications, focusing on individuals engaged in moonlighting. A considerable portion of these notices were distributed during the fiscal years 2019-2020 and 2020-2021.
Using automated systems, tax authorities have effectively identified cases where people failed to report their extra earnings from alternate sources, particularly tasks or projects beyond their main employment.
This trend is prominent among professionals in fields like IT, accounting, and management. They're managing income from various sources. Tax authorities haven't sent notices for recent financial years yet, but there might be more notices in AY 2023-24.
The concern isn't moonlighting itself, but rather not revealing the extra income earned from it. Moonlighting, and having a second job, is not illegal.
However, not accurately reporting the earnings, which sometimes exceed the primary job's income, is being looked into by the I-T department. It's crucial to truthfully declare all income sources to follow tax laws.
For those with side jobs, it's wise to classify the extra income as either business or professional earnings, based on the job type. This openness aligns with tax rules. Failing to report additional income could lead to tax notices and penalties.
0 Discussion Comments
No comments yet
Be the first to share your thoughts on this article.