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Earning from moonlighting with regular job is salary or professional fees, what are experts called and how will income tax be charged?


There is no separate rule or clause in the Income Tax Act regarding moonlighting.
Overall the standard deduction should not be more than 50 thousand.
Also, the total exemption of 80C will not be more than Rs 1.5 lakh.

New Delhi. Infosys CEO Salil Parekh took a soft stance on moonlighting last week and said that his company was making such a rule in which employees would be exempted from moonlighting. This means that soon companies can openly allow their employees to do moonlighting. In such a situation, the question arises whether income from other place along with regular job will be considered as your salary or professional fees?

Income tax expert and investment advisor Balwant Jain says that there is no separate rule or clause in the Income Tax Act regarding moonlighting. Usually, employees work part-time with one employer during a regular job with another employer and are paid in return. Therefore, this income will either be kept in the category of salary or it will be considered as professional fee.

Also read – Good news for SBI customers, bank increased interest rates on savings account, check latest rates

If there are regular employees in both the places then…
Raman Kumar, a resident of Delhi, works a regular job in a multinational company and also works for another company during two-week holidays. In such a situation, they are given salary from both the companies. Now that both the companies pay them salary, then both the employers will also give standard deduction and exemption under section 80C of income tax. After this, the Income Tax Department will charge tax on the balance amount according to the slab. It is to be noted here that the standard deduction of both the companies together should not be more than 50 thousand nor will the total exemption of 80C be more than 1.5 lakh rupees.

Be cautious on PF too
If you work as a regular employee in both the companies, then obviously there will be a deduction of PF on both the salaries. In such a situation, it has to be kept in mind that according to the new rule, your total contribution should not exceed Rs 5 lakh in any financial year. If you cross this limit, then you will have to pay tax according to your slab on the amount more than 5 lakhs.

If you give part time service then…
If an employee works part time by joining another company with regular job, then the money received by him is not considered as salary. This amount is kept in the category of professional fees. Under Section 44ADA of the Income Tax Act, only 50% of the total amount received as professional fees is taxable, the rest is treated as your business expenses. You can also claim tax exemption on professional fees by adding meeting expenses, travel, office rent, electricity bills, salary to employees, depreciation of laptops and other products. However, it has to be kept in mind that if the professional fee is more than Rs 20 lakh, then you will be required to do GST registration.

Tags: business news in hindi, Employee Salary Rules, income tax, IT Companies, Job



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