The income tax authorities have initiated the process of sending notifications to professionals who earned additional income beyond their regular salaries but did not disclose these supplementary earnings (moonlighting) in their tax filings.
Most of the 1,100 notices issued so far pertained to the financial years 2019-2020 and 2020-2021. The Economic Times reported on August 8, quoting people familiar with the matter. The income from moonlighting, or working outside of full-time employment, was often found higher than the regular salary, they said.
The tax department was able to detect these undeclared incomes on data scrutiny. Most of the payments were made online and some were received from overseas accounts, the report said.
“We have found a large number of instances of IT, accounting and management professionals who were getting payments monthly or quarterly from two or more companies but were declaring income only from their full-time job in their income tax returns,” a senior official told.
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Moonlighting Income Scrutiny
The initial round of notifications was dispatched to individuals whose unreported yearly earnings fell within the range of Rs 5 lakh to Rs 10 lakh, according to the report. Officials noted that there was a higher occurrence of such cases during the fiscal years 2019 to 2021.
A number of companies informed the department that their employees were engaged in such practices, with proper Permanent Account Numbers (PANs).
For the financial year 2021-22, the department is yet to analyse data. It expects that the number of notices will rise. “People are not getting tax notices for moonlighting. It is for incorrectly declaring their income. In some cases it is double of what they were getting from their salary,” the senior official quoted earlier said. Cash payments are also being investigated, officials said, as quoted by ET.
During the pandemic, moonlighting became popular in the IT sector, especially for people working from home.
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