Receiving second income from moonlighting? Here's how you will be taxed

Gupta further added that the remaining amount will be taxed at applicable slab rates. In case the payable tax exceeds Rs 10,000, the taxpayer must pay advanced tax in four installments of 15 percent, 45 percent, 75 percent and 100 percent.

Alternatively, if the second job is one of the professions listed in section 44ADA of the Income Tax Act and that income is less than Rs 50 lakh, taxpayers can avail a presumptive tax scheme.

“Under this, the moonlighting professionals have to offer only 50 percent of their professional fees to tax,” Yeeshu Sehgal, Head of Tax Market at AKM Global said.

In such a scenario, the taxpayers cannot claim expenses as they have received a flat 50 percent reduction. They are only required to pay the last instalment of advance tax on March 31.

If taxpayers receive their moonlighting income as salary, it can complicate the tax calculations and the taxpayer may have to be extra careful while filing their returns.

For deducting TDS, employers draw up an estimated taxable income figure. In such an estimation, both employers consider the standard deduction of Rs 50,000, whereas the taxpayer can claim it only once. They may also consider the 80C deduction, which may exceed the maximum limit of Rs 1.5 lakh in total.

So, while filing taxes, Gupta said that the taxpayers will have to make these changes and bear the brunt of additional taxes and interests.

"To avoid this, the taxpayers must compute the total taxes, subtract the tax deducted (TDS) by the employer and pay the balance as advance tax instalments," he said.

In the given instance, TDS has been deducted by the employers on a total income of Rs 18,50,000. In contrast, the tax is payable on Rs 20,00,000. The taxpayer must pay advance tax on additional income of Rs 1,50,000. Failing this, they will have o pay a tax Rs 1,50,000 along with interest.