‘Day job income is around 30LPA and evening side hustle gets me around $2000’: I have two income sources and need strategies to save on taxes. What practices can I adopt?

Hi Money Minder,

Hey Money Minder, I’m juggling a full-time software developer job and helping out a startup on the side. My main gig pays about $36,000 a year, and I’m pulling in an extra $2,000 from my side hustle which lands in my WazirX account. Can you share some tax-saving tricks?

For context, I’m single, and my only family is my 18-year-old brother who depends on me.

Thanks a bunch!
Techie with a Side Hustle

Response from THE MONEY MINDER:

Certainly! Here it is:

Hello There,

It sounds like you’re doing quite well with both your day job and your evening side hustle—congratulations on your success! To address your concern about tax savings, there are several strategies you can adopt to make the most of your income while staying compliant with tax regulations.

Firstly, considering you’re earning a significant amount from your day job (around ₹30 LPA) and additional income from your side hustle ($2,000 per month in your WazirX account), it’s crucial to streamline your financial planning. One key approach is to maximize the available deductions under Section 80C of the Income Tax Act. This can include investments in Public Provident Fund (PPF), Equity Linked Savings Scheme (ELSS), National Savings Certificates (NSC), and contributions to Employee Provident Fund (EPF). Each of these instruments offers tax benefits and can help reduce your taxable income significantly.

Furthermore, given that you are unmarried and have a brother who is dependent on you, you might be eligible for an additional deduction under Section 80DD for maintenance, which can further reduce your tax liability. You should also consider taking out a health insurance policy for both yourself and your brother. Premiums paid for health insurance offer deductions under Section 80D, thereby not only ensuring medical security but also providing additional tax relief.

Another important aspect you should evaluate is the tax treatment of your cryptocurrency income. The income you earn from your WazirX account is taxable and should be declared under the “Income from Other Sources” category. You should maintain detailed records of all your cryptocurrency transactions to ensure accurate reporting and to make sure you only pay the necessary taxes on your net gains.

Lastly, consulting with a professional tax advisor can provide you with personalized guidance tailored to your specific financial situation. They can help you navigate the complexities of tax laws and identify potential deductions and credits that you might have overlooked.

Best of luck with your continued endeavors and financial planning! Should you need any more assistance, feel free to reach out.

Warm regards,
THE MONEY MINDER