Prime Today News Desk: A salary is not the only income visible to the tax department. Money earned from freelance work, consulting, online sales, content creation or another side activity may also need to be disclosed in the income-tax return. Even a relatively modest amount, such as ₹2 lakh from a side hustle, should not be ignored.
The correct tax treatment depends on the nature and regularity of the activity. Occasional receipts may be classified differently from a continuing business or profession. Taxpayers should identify the right income head and choose the appropriate return form instead of simply adding every receipt to salary income.
Keep evidence of income and expenses
Bank statements, invoices, platform payout reports and contracts help establish how much was earned. When the side activity qualifies as a business or profession, expenses incurred wholly and exclusively for that work may be deductible. Examples can include eligible software subscriptions, platform charges, professional fees or a reasonable business-use portion of certain costs.
A deduction must be supported by records and should have a clear connection with earning the income. Personal spending cannot be converted into a business expense merely because the taxpayer also works from home. GST registration, tax deduction at source and advance-tax obligations may also arise depending on turnover, the type of service and the amount of tax payable.
Compare tax regimes carefully
The old and new tax regimes offer different combinations of rates and deductions. A salaried person with side income should calculate the total liability under the applicable rules rather than choosing a regime based only on the salary component. Presumptive taxation may be available to some eligible small businesses or professionals, but its conditions must be checked.
Tax rules and filing thresholds can change. Anyone with substantial or complicated side income should consult a qualified tax professional and verify the latest Income Tax Department guidance. Legal tax planning is based on accurate disclosure and permitted deductions, not on concealing receipts.
Simple compliance checklist
Keep a separate record of receipts, preserve expense invoices and reconcile platform statements with the bank account before filing. Tax already deducted should appear in the relevant statements, but discrepancies should be resolved instead of assuming the credit will update automatically.
People whose side income grows during the year should estimate advance tax early. Waiting until the return deadline can lead to interest and a sudden cash-flow burden even when all income is ultimately disclosed.
Source: Business Standard. This is an independently written report based on the cited reporting.
