The Income Tax Department has issued over 1,100 notices to professionals in the IT sector who earned additional income beyond their regular salary and failed to declare it on their tax returns. The authorities have taken action against individuals engaged in moonlighting activities, aiming to curb underreported tax liabilities. This crackdown sheds light on the growing trend of side gigs in the Indian job market and its impact on tax compliance.
Unveiling Hidden Income: A Digital Trail
The tax authorities have employed digital methods to trace moonlighting income, particularly focusing on online payments and transactions from foreign accounts. This data-driven approach has enabled them to identify cases where professionals were earning more from secondary sources than from their primary employment.
Underreported Earnings Raise Concerns
Many professionals, including those in the IT, accounting, and management sectors, were found to be receiving payments from multiple companies on a monthly or quarterly basis. However, they were only reporting income from their full-time positions in their tax filings. This discrepancy has prompted the issuance of notices to address the incorrect declaration of earnings.
Not Just Moonlighting, But Misdeclaration
The notices sent by the Income Tax Department are not solely targeting moonlighting individuals. Instead, they focus on those who inaccurately reported their income, leading to potential tax evasion. In some instances, individuals have understated their earnings, with discrepancies even doubling their reported salary.
Rising Trend of Side Gigs
The practice of moonlighting, where employees take on additional jobs alongside their regular employment, gained popularity during and after the pandemic. However, this trend has raised concerns among companies, such as IT giant Wipro, which argue that juggling multiple jobs can negatively impact an employee’s productivity.
Anticipated Increase in Notices
While the initial phase of notices addressed undeclared annual payments ranging between Rs 5 lakh and Rs 10 lakh, the Income Tax Department is yet to analyze data for the financial year 2021-22. Experts expect that the number of notices will rise as the authorities continue to scrutinize tax filings for potential misdeclarations.
As the Income Tax Department intensifies its efforts to ensure accurate income reporting, professionals are urged to provide transparent and complete financial information in their tax returns. This move not only contributes to a fair and equitable tax system but also supports the country’s economic growth and development.
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