How Does Income Tax Impact Second Jobs in India?

There are a lot of people working second jobs due to various reasons. One of the main reasons that cause many people in India to start working second jobs is the pandemic. Many salaried people got pay cuts, while some were laid off. The issue wasn’t discussed until several major companies started calling out their employees who were caught moonlighting or having second jobs. Some companies favored the employees, while others were against moonlighting.

One of the most frequently asked questions about second jobs is how Income Tax impacts second jobs. The Income Tax does not mention moonlighting or double jobs tax, which might complicate the tax calculation process. If you have a second job in India or would like to learn more about how Income Tax impacts second jobs in India, read on to find our detailed
information.

Income from iGaming

Many people in India visit the best payout casinos to try their luck, and when they receive any winnings, they’re considered an element of the player’s annual income. When filing for taxes, the taxpayer must put their winnings under the heading Income from Other Sources.

Players tax their online casino winnings at a flat rate of 30% regardless of their tax bracket. This is a legally required thing to do. Taxpayers in India earning money from online casinos must disclose their earnings during annual tax filing.

Business and Professional Income

When you receive another income from corporate services you rendered, the income is eligible for taxation under the head PGBP (Profits and Gains from Business and Profession). The expenses you’ve used while doing the business or profession, e.g. traveling costs, office tools (laptop and such), etc., will be reduced from the income and considered business expenses. When the tax owed goes above ₹10,000, you are obligated to pay advance tax in four incremental installments of 15%, 45%, 75%, and 100%.

When the taxpayer’s second employment is a profession listed under section 44ADA of the Income Tax Act and the income earned is lower than ₹50 lakhs, the taxpayer may choose to pay only half of their income for tax. In the case of the profession, the taxpayer can’t claim any expenses as they’ve received a 50% rebate. Moonlighters receiving a second income from the profession are only required to pay the last installment of the Advance Tax.

Expenses Tax Reduction

As mentioned above, there are some expenses that taxpayers must reduce before filing their taxes. If the taxpayer works freelance for themselves, the taxpayer, as an independent contractor, may list their business expenses. However, the total income from freelancing must be below ₹50 lakhs.

These expenses include the requirements bought for the business. Taxpayers may include data charges, reasonable electricity costs, subscription charges for tools, software, etc. Taxpayers can claim up to 50% of the total income from freelancing as taxable income.

Second Job Salary

When your second job provides a salary, it may affect your tax calculation. Taxpayers should pay more attention and be careful when filing returns. The employers are meant to draw an estimated taxable income amount for the Tax Deducted at Source. After the estimation, they’ll factor in the standard deduction of ₹50,000, which the taxpayer can claim once.

The employers may (at their discretion) also consider the 80C deduction, which can exceed the maximum limit of ₹1.5 lakhs in total. When filing taxes, taxpayers must account for the differences above and make appropriate adjustments. They must calculate the total taxes owed

while considering all sources of income. Taxpayers must then subtract their employers’ tax already deducted at source (TDS).

Moonlighting as Part-Time Basis Income

Income from part-time jobs is entirely under a different category. The employee would usually not report their part-time job to their primary company, but as a part-timer, the employee isn’t considered an official staff at the other entity. Jobs such as insurance agents who provide service door to door for a commission, short-term jobs after office hours or on holiday fell under the part-time job category.

In the case of income from part-time jobs, the taxpayer’s part-time income or commissions are subject to said taxes and required to show it under the head Income from other Sources. The taxpayer must pay the requisite income tax after filing their Return of Income.

Understanding Income Tax for Second Jobs

Having second jobs can lead to tax implications that individuals in India must be aware of and handle carefully. As there’s no direct mention of moonlighting in the Income Tax regulations, individuals with second jobs must exercise caution and pay attention to details when filing their tax returns.

The tax implications of moonlighting vary depending on the type of second job. Therefore, the taxpayer must file their tax according to the source of income of their second job. Taxpayers must carefully account for those differences and make appropriate adjustments when filing their taxes. All in all, people with second jobs in India must understand the specific tax implications based on the nature of their second job and accurately report all income sources and deductible expenses.