First, check your employment terms
Many employment contracts restrict outside work, particularly in the same line of business, and require you to disclose it or get permission. Breaching them is an employment matter, not a tax one, but it can cost you the job. Read your contract and policies, and avoid using your employer's time, equipment, clients or confidential information.
Government employees are in a different position: their service conduct rules generally bar private trade or business without permission. Check before starting anything.
What to register, and when
| Registration | Needed when |
|---|---|
| None to start as a sole proprietor | A proprietorship is simply you trading in a name; see sole proprietorship registration |
| GST | Turnover crosses ₹20 lakh for services or ₹40 lakh for goods (lower in some states), or from the first sale of goods to another state; see GST registration limit 2026 |
| Udyam | Optional, but useful for MSME benefits and bank credit; free on the government portal |
| Shops and establishments licence | If you run premises such as a shop or office, under your state's law |
| FSSAI | If you make or sell food, including from home |
| Current bank account | Not a legal requirement, but keeping business money separate makes tax and GST far simpler |
If the side business carries real risk or will take on a partner, a one person company or an LLP gives limited liability, at the cost of yearly filings. See proprietorship vs private limited company.
Tax: one return for salary and business
- ITR-4 (Sugam) if you declare business or professional income on the presumptive basis (8% or 6% of turnover for a business, 50% of receipts for a specified profession) and your total income is up to ₹50 lakh. See how to file ITR-4.
- ITR-3 if you keep books and declare actual profit, or ITR-4 does not fit.
- Standard deduction still applies to the salary: ₹75,000 under the new regime.
- Regime choice: with business income, the choice of the old regime is made by the return due date, and switching back and forth is restricted. Compare both with our income tax calculator.
- Due date: with business income and no audit, the return for FY 2025-26 was due on 31 August 2026, a month later than for salary alone, under the Finance Act, 2026; audit cases have later dates. See ITR due dates.
Advance tax: the trap for salaried people
Your employer deducts TDS on your salary only. If the tax on your business profit, after TDS, comes to ₹10,000 or more for the year, you must pay advance tax in instalments (15 June, 15 September, 15 December and 15 March), or all by 15 March if you use the presumptive scheme. Miss it and interest runs at 1% a month. Our advance tax interest calculator shows the cost.
An alternative is to give your employer details of the other income so it deducts more TDS from your salary. Either way, the tax is paid during the year rather than as a lump sum with the return.
Talk to Regikart
We set up the right structure and registrations for a side business, file your combined income tax return, and work out the advance tax so there are no surprises. Call or WhatsApp +91 70444 94804.
Frequently asked questions
Can I run a business while working a salaried job in India?
Tax law does not prevent it for private-sector employees, but your employment contract may restrict or require disclosure of outside work. Government employees generally need permission under their service conduct rules.
Do I need to register a business to freelance alongside my job?
Not to start as a sole proprietor. GST registration becomes necessary once turnover crosses ₹20 lakh for services, and some activities need licences, such as FSSAI for food.
Which ITR do I file with salary and business income?
ITR-4 if you use the presumptive scheme and total income is up to ₹50 lakh; otherwise ITR-3.
Do I have to pay advance tax on my side income?
Yes, if the tax for the year after TDS is ₹10,000 or more. Your employer's TDS covers only your salary unless you declare the other income to it.
Can I still claim the standard deduction?
Yes. The ₹75,000 standard deduction under the new regime applies to your salary income regardless of the side business.
About the author
Regikart CA Team
Chartered Accountants at Regikart. Want to discuss this in the context of your business?
