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How Salaried Employees Should Report Side-Business Income in Tax Returns
A person can have a regular job and also earn money from a side business.
The salary and side-business earnings are calculated separately for tax purposes.
Regular side-business income is usually treated as business or professional income.
The person may need to use ITR-3 or ITR-4, depending on whether they choose presumptive taxation.
Business expenses can usually be subtracted from business income.
Salary expenses cannot generally be claimed in the same way.
TDS deducted by an employer or client may not cover the entire tax bill.
Advance tax may be required if the remaining yearly tax liability is at least ₹10,000.
Regular side-business earnings are generally reported as “Profits and Gains from Business or Profession,” separately from salary income.
Taxpayers generally use ITR-3, or ITR-4 when choosing the presumptive taxation scheme.
If an audit is not required, income earned in FY 2025-26 must be reported by August 31, 2026, according to the article.
Business-related expenses can generally be deducted from revenue, while salaried employees instead claim permitted deductions and exemptions.
Advance tax may apply when net annual tax liability is ₹10,000 or more, and GST registration may be required after applicable revenue thresholds are crossed.
- Who
- Salaried employees who also earn income from a business or profession, including the examples of a software developer and a doctor.
- What
- They must report salary and side-business or professional income under the applicable income-tax rules and may also have advance-tax and GST obligations.
- Where
- In the applicable income-tax return and, when required, GST filings.
- When
- For income earned in FY 2025-26, the article states that taxpayers whose accounts do not require an audit must file by August 31, 2026. Advance-tax instalments are due on June 15, September 15, December 15, and March 15.
- Why
- To correctly calculate taxable income, claim eligible business expenses, pay any advance tax due, and comply with GST registration requirements.
Key facts
- Applicable income classification
- Regular side-business or professional earnings are generally reported under “Profits and Gains from Business or Profession.”
- Potential ITR forms
- ITR-3 generally applies; ITR-4 may apply when opting for presumptive taxation.
- Filing deadline cited
- August 31, 2026, for FY 2025-26 when accounts do not require an audit.
- Business expenses
- Business-related expenses are generally deducted from revenue to calculate net taxable profit.
- Advance-tax threshold
- Advance tax is payable when net tax liability after considering TDS and other tax credits is ₹10,000 or more.
- Advance-tax schedule
- 15% by June 15, 45% cumulatively by September 15, 75% cumulatively by December 15, and 100% by March 15.
- GST thresholds cited
- The generally applicable threshold is ₹20 lakh for services and can generally be ₹40 lakh for businesses supplying goods.
Quotes
Gaurav Makhijani
Managing Partner at MGA and tax expert quoted in the article
“If a doctor works as an employee in a hospital and receives a salary. The hospital deducts TDS from the salary. On weekends, doctors also work as visiting consultants for other hospitals and earn professional fees. The second hospital may deduct TDS at the applicable rate on the professional fees.”
livemint.com
“Therefore, if a person has both a salary and a side business, the income from each source is calculated separately according to the rules applicable to that particular type of income.”
livemint.com
Sources
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