Income Tax Authorities Caution Moonlighting Employees On Tax Implications Of Undisclosed Income

Moonlighting Can Have Tax Implications, Warn Income Tax Authorities

Income tax authorities caution moonlighting employees on tax implications

The moonlighting issue has come to the fore in recent weeks and drawn varying responses over the practice, particularly in the IT sector.

Moonlighting involves taking up a second job while still being on a company’s payroll.

While such assignments or jobs can bring in additional income, the Income Tax (IT) authorities have cautioned moonlighting employees that it can have some tax implications, reported The Economic Times

The principal chief IT commissioner, Tamil Nadu, Puducherry and Kerala, R Ravichandran, said that any company or individual pays over Rs 30,000 to a person for a contract job or pays a professional fee is liable to deduct taxes at source (TDS) at the applicable rate.

According to Section 194C of the Income Tax Act, any individual who gives a fee to a residential individual for carrying out contract work must deduct TDS.

Here, the individual making the payment can be a firm, trust, company, or local authority, among others.

In addition, the section states that if the TDS deduction is taking place as per the provisions of Section 194C of the IT Act, then it should be done “at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier”.

Section 194J of the IT Act states that a person is liable to deduct TDS at a 10 per cent rate while making certain types of payments of more than Rs 30,000 to a resident.

TDS must also be deducted when the aggregate amount of the payment exceeds Rs 1 lakh in a financial year.

Payments here include the amount charged as royalty, professional services fee, technical service fee, or non-compete fee under Section 28(VA) of the Income Tax Act.

The tax authorities have urged employees to declare any additional income in their tax returns and pay the applicable tax.

The report added that if such income is detected later, the IT department can impose penalties and initiate an inquiry under Section 148A of the IT Act.

Featured Video Of The Day

US Federal Reserve Raises Interest Rates By 0.75% In Fight Against Elevated Inflation

Source link

You cannot copy content of this page