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 ₹ 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.
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.
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Malvika Tiwari, |
