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Arshathul Afia
Arshathul Afia is a journalism graduate and fintech content writer with 4+ years of experience in digital publishing and research-led writing. She has written 200+ articles covering personal finance, lending, banking, digital payments, credit, insurance, and major financial developments in India. At LoansJagat, she focuses on simplifying complex fintech news, RBI updates, loan-related changes, policy developments, and industry trends for everyday readers. Her journalism background helps her approach stories with research, context, and clarity, while her SEO experience ensures content remains discoverable and relevant. She aims to make financial news easier to understand, practical, and useful for readers across India.
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Your salary and side income can impact tax filing, TDS, advance tax, and ITR. It can also impact your choice of tax regime.
An individual who earns 20 lakh in salary and tends to earn another 5 lakh from various sources e.g. tuition, freelancing, design work, consulting, etc., this year will need to look beyond Form 16. The Salary Deduction and Reporting portion is completed by the employer. The portion that relates to earnings from work other than salary is completed by the employee. Different taxes may apply to different income sources.
The ₹75,000 standard deduction is available against salary under the new regime. Side income does not automatically receive the same treatment.
ITR selection also changes once business or professional income enters the picture. ITR-4 can work for eligible taxpayers using presumptive taxation and meeting the prescribed conditions. Others may need another return form.
The Income Tax Act, 2025 applies to income earned from 1 April 2026, bringing the Tax Year 2026-27 framework into use.
Start with one question: where did the ₹5 lakh come from?
A freelance consultant may receive professional fees. A person selling goods online may have business receipts. Someone earning rent, interest, commission, or income from another activity may fall under a different head. A casual label does not decide tax treatment.
Section 44ADA offers eligible professionals a presumptive route. It applies to resident individuals and partnership firms, other than LLPs, carrying on specified professions. The gross-receipt ceiling is ₹50 lakh. It rises to ₹75 lakh when cash receipts do not exceed 5% of total receipts.
Specified professions include legal, medical, engineering, architectural, accountancy and technical consultancy.
A taxpayer using Section 44ADA generally declares income according to the presumptive method instead of separately working through each business expense. Separate expense claims are not available once income is computed under this provision.
So a ₹5 lakh consulting receipt cannot be treated the same way for everyone. Eligibility comes first.
Form 16 gives a clear salary trail. Side work creates another set of records.
A private client paying ₹5 lakh for consulting may issue a TDS certificate. Another may pay without deducting tax. Bank entries may arrive in several instalments. Invoices, payment dates, TDS entries, Form 26AS and the Annual Information Statement should be checked against each other before filing.
Advance tax can also arise. The Income Tax Department states that advance tax generally becomes payable when estimated tax liability for the year reaches ₹10,000 or more, subject to the rules. Salary TDS may cover much of the bill, but not necessarily the tax arising from side income.
Eligible taxpayers using presumptive taxation under Section 44ADA can pay the full advance-tax liability by 15 March.
The above information has been adapted from Income Tax Department instructions for the assessment year (AY) 2026-27 and Section 44ADA.
Maintain your salary documents and documentation for side-income throughout the year. Provide them while preparing your income tax return.
Back in July 2024, the government changed one figure that directly affected salaried taxpayers. The standard deduction under the new regime went up from ₹50,000 to ₹75,000. The Budget note, released on 23 July, said nearly 4 crore salaried employees and pensioners were expected to benefit. For some salaried taxpayers, the stated tax saving was as much as ₹17,500.
Then came the February 2025 Budget. New-regime slabs were revised again, and the government said annual income up to ₹12 lakh could result in no tax payable where the rebate conditions are met.
Salary earners got a slightly higher effective threshold. After adding the ₹75,000 standard deduction, it reached ₹12.75 lakh.
That still does not make side earnings disappear for tax purposes. Money from freelancing, consulting or similar work has to be reported, and it can change TDS, advance-tax payments and the ITR that needs to be filed.
That relief does not remove the need to report side income. A salaried person may already have monthly TDS from the employer, while freelance or consulting payments can create a separate tax balance.
LoansJagat’s earlier coverage has also flagged filing questions around freelancing, tuition, creator work and consulting. Presumptive taxation can simplify reporting, but only for eligible professionals.
From 1 April 2026, the Income Tax Act, 2025 applies to income earned from that date and uses the Tax Year 2026-27 framework. For someone earning from employment and outside assignments, payments, TDS and receipts need to fall into the correct reporting period.
The task is clear. Identify the income source, check tax already deducted, calculate any balance and choose the return form that fits.
A ₹20 lakh salary and ₹5 lakh of side income do not create one flat tax number. The salary portion, nature of outside receipts, available provisions, TDS already deducted and chosen regime all feed into the final calculation.
For salaried employees starting side work, early records can prevent confusion. Keep invoices, bank credits, TDS documents and payment details from the start.
The Income Tax Act, 2025 goes into effect on the 1st of April, 2026. It will be necessary to determine the correct classification and reporting year for persons with more than one source of income.
The ₹5 lakh must be reported under the appropriate income head. The taxpayer should also check TDS, advance tax and the correct ITR form.
No. The 30% slab under the AY 2026-27 new regime applies only to taxable income above ₹24 lakh, not to the full gross amount.
Yes, if the person meets the statutory conditions and the side activity falls within an eligible specified profession. It does not cover every freelance activity.
The taxable amount from professional work forms part of total income. The calculation method depends on applicable provisions, including Section 44ADA where eligible.
Yes. Both can be reported in one return, provided the taxpayer selects an ITR that supports the relevant income heads and meets eligibility conditions.
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