Moonlighting: Why income tax department is sending notices to these taxpayers

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income tax returns (ITRs), The Economic Times reported. The tax notices were sent to individuals who earned extra from the ‘moonlighting’. Over 1,000 notices were sent for the financial years 2019-2020 and 2020-2021, as per the report published in ET.

Moonlighting means taking up another job in addition to one’s primary employment. The second job is typically taken without the employer's consent at their regular job. The debate around moonlighting grabbed headlines in the IT industry ever since Wipro Chairman Rishad Premji red-flagged the issue.

Mumbai-based investment and tax expert Balwant Jain said that basically, moonlighting is when a person receives a salary from two places, and taxpayers are expected to mention the same while filing their ITR. He further added that ‘income tax laws do not forbid you from working at two places’. “Project Insight by the income tax department has the latest data analytics which helps the department to identify those tax evaders whose income tax return filing and expenses don’t match with what they have shown up," Said Balwant Jain "Many professionals earned extra money on top of their regular salaries (also known as moonlighting income), but they forgot to mention these earnings when they filed their taxes.

The tax authorities have now sent notices to remind them to include this extra income. This highlights how important it is to be honest and complete when reporting earnings for taxes." said Abhishek Soni, CEO and Co-founder Tax2win. In Budget 2021, the government introduced Section 148A in the Income Tax Act.