By Prashant Janadri

Moonlighting is the practice of having employees perform a side job, say freelancing work or something similar, for financial gains. Recently moonlighting is very much talked about after companies started firing employees stating moonlighting as a reason. It has resulted in stirring a debate among the corporate sector with the majority of businesses issuing comments denouncing the practice, and some even taking legal action. However, several businesses have said they are open to allowing workers to moonlight within a certain framework.

Swiggy, Tech Mahindra, Former CFO of Infosys, TV Mohandas Pai, CRED’s Kunal Shah and even the minister of State for Skill Development, Entrepreneurship, Electronics and Information Technology, Rajeev Chandrasekhar, believe that there’s no problem with employees involved in dual employment. 

Laws 

There is no explicit definition of “double employment” or “dual employment” in Indian law or a blanket ban on moonlighting. However, Indian laws do regulate it to some extent. Section 60 of the Factories Act of 1948, forbids dual employment but organisations that do not run factories do not fall under the ambit of the Factories Act.

Also Read: Moonlighting along with a regular job? Know the income tax implications

The Industrial Employment (Standing Orders) Central Rules, 1946, state that a workman cannot be doing dual employment work against the interest of an industrial establishment. Section 65 of the Bombay Shops and Establishments Act, 1948 has restrictions on dual employment during leave or holiday. Section 9 of the Delhi Shops and Establishment Act,1954, also restricts double employment. Each state has its own laws and regulations, and most of the statutes exempt IT companies who are free to take an independent call on the issue of moonlighting.

But what about the taxation of moonlighting income?

As there is no mention of moonlighting in the law, likewise there is no separate mention of moonlighting in Income Tax as well. According to Income Tax authorities, moonlighting has some tax implications. 

The income from the moonlighting job can be received either as salary or professional fees. Both come under different tax categories.

Income from moonlighting received as professional fees

Income of a professional nature is taxed under the head ‘PGBP-Profits and Gains from Business and Profession’. The expenses incurred during the second job, such as travel costs, depreciation on a laptop, etc., can be considered business expenses and reduced from their income. The remaining amount will be offered to tax at applicable slab rates. If the tax payable exceeds Rs 10,000, taxpayers must pay advance tax in four instalments of 15%, 45%, 75%, and 100%.

Alternatively, if the second job is one of the professions listed in section 44ADA of the Income Tax Act and the income is less than Rs 50 lakh, then the taxpayer has the option to pay tax on only 50% of their income. They cannot claim the expenses in this case as they have received a flat 50% reduction. Also, they are required to pay only the last instalment of Advance tax on 31st March.

Income from moonlighting received as salary

If the moonlighting income is received as a salary, both employers will consider a standard deduction of Rs 50,000 and Section 80C deductions to calculate the tax liability. Additionally, both employers will take into account the basic exemption limit and consider the tax slab as per the respective salaries. This could lead to the TDS being deducted by each employer to be lower than the taxpayer’s aggregate tax liability

Ensure you are not duped while signing up for a moonlighting job

Moonlighting has brought the scope of getting duped by scammers in the name of jobs. Scammers are extracting the database from job sites and using it to trap people. They send mass mailers and ask for a security deposit, interview fee or other charges, a prerequisite for scheduling an interview. While some disappear as soon as they get the money, others conduct online or telephonic interviews, even allot fake appointment letters. They use different techniques like phishing, mailing, fake websites, fake campus placements, etc. 

To avoid that candidates can ensure that:

  • They go to an authentic official website
  • Post CV with specific job positions
  • Never pay for securing a job
  • Look for a red flag in the mail/letter
  • Validate mail by calling the firm

Having a healthy lifestyle while earning good is equally important

Taskers consider that working in the gig economy contributes to both professional and personal development as they get varied experience by working on multiple types of assignments.  An average moonlighting person is working around 10-15 hours per day in order to gain experience, exposure and income. 

While gaining exposure and extra income, it becomes tricky to manage health and well-being. Taking a few extra steps while choosing and doing a second job can add extra plus points to your professional life. 

  • Manage your time properly: Effective time management may be the most important component of successfully working two jobs.
  • Choose the second job carefully: Select and choose the second job according to your convenience, skills, and target. 
  • Take care of yourself and loved ones: Staying healthy and maintaining a proper work-life balance is always necessary for good health. 
  • Protect your first job: Always take care that your quality of work in your primary job is never compromised. 

(The author is Co-founder of Taskmo, a B2B Gig marketplace. Views expressed above are those of the author and do not necessarily reflect the views of financialexpress.com)