Filing ITR for Salaried Individuals with Side Hustles: A Comprehensive Guide
Introduction
As a salaried individual, you are required to file your income tax return (ITR) annually. However, if you have a side hustle, such as freelancing, consulting, or running a small business, you need to report this income in your ITR. In this guide, we will explore the process of filing ITR for salaried individuals with side hustles, highlighting the key forms, documents, and tax implications.
Understanding Side Hustles
A side hustle is any additional income you earn outside of your primary employment. This can include freelancing, consulting, running a small business, or any other form of self-employment. As a salaried individual, you are required to report this income in your ITR, even if it is not your primary source of income.
Choosing the Right ITR Form
As a salaried individual with a side hustle, you need to choose the right ITR form to file your taxes. The most common forms used by salaried individuals with side hustles are ITR-1 and ITR-4.
ITR-1: Sahaj
ITR-1 is a simple form that can be used by salaried individuals who have income from salary and other sources, such as interest, dividends, and capital gains. This form is suitable for individuals who do not have any business income or income from profession.
ITR-4: Sugam
ITR-4 is a more comprehensive form that can be used by salaried individuals who have income from salary and other sources, including business income or income from profession. This form is suitable for individuals who have a side hustle and need to report this income in their ITR.
Documents Required
To file your ITR, you will need to provide certain documents, including:
- PAN Card: Your permanent account number (PAN) card is required to file your ITR.
- Aadhaar Card: Your Aadhaar card is required to file your ITR, as it is used to verify your identity.
- TDS Certificate: You will need to provide a TDS certificate, which is a document that shows the taxes deducted at source by your employer.
- Loan Documents: If you have taken a loan, you will need to provide the loan documents to claim deductions.
- Financial Year’s Balance Sheet: You will need to provide a balance sheet for the financial year to report your income and expenses.
- Audit Record: If you have a side hustle, you may need to provide an audit record to report your income and expenses.
Tax Implications
As a salaried individual with a side hustle, you need to report your income from both sources in your ITR. You will need to calculate your total income, including your salary and side hustle income, and report it in your ITR.
Tax Deductions
As a salaried individual with a side hustle, you may be eligible for certain tax deductions, such as:
- Section 80C: You can claim a deduction of up to ₹1.5 lakhs under Section 80C for investments in ELSS, ULIP, FDs, and tuition fees.
- Section 80CCC: You can claim a deduction of up to ₹1.5 lakhs under Section 80CCC for pension plans.
- Section 80D: You can claim a deduction of up to ₹50,000 under Section 80D for health insurance premiums.
Conclusion
Filing ITR for salaried individuals with side hustles can be complex, but understanding the key forms, documents, and tax implications can help you navigate the process with ease. By following this guide, you can ensure that you are reporting your income accurately and taking advantage of the tax deductions available to you.