I'm a salaried person with an annual income of around 4 L/annum. Besides this, I also do freelancing which gives me some 2L/annum. A part of my income is deducted as tax from my employer at a rate of 20%, since he's not aware of my freelance income. But, since my total income is above 5 L/annum, how should I calculate tax? If I pay tax for my freelance income, is there any way that my employer will come to know about my freelance income? Is there any for him to know of my additional income using my PAN ID?
You are liable to pay tax on the entire amount 4 + 2 = 6 lacs.
You can declare the additional income to your employer and he will appropriately deduct the tax and deposit it with Income Tax Department.
The employer is not obligated or responsible to know your additional income.
The responsibility of declaring the additional income and paying taxes accordingly is your responsibility.
The employer gives a Form16 that shows the salary paid and the tax deducted.
One has to file returns and there are section where you declare income from other sources. In this case declare it as 2 lacs. As there is additional tax obligation, one has to pay advance tax if the amount is more than 10, 000/- [or self assessment tax while filing returns]. The tax can also be paid online using the gateway of various Bank. Alternatively one can get the form, from local Income Tax office and pay the tax by cash in any Bank.
Refer to the Income Tax India Govt website for more details.
The form 16 is applicable when someone else deducts tax at source and deposits with Govt. If you directly pay tax, there is no form 16 needed. You have to declare this as "Advance Tax Paid" in the relevant section of the Tax Returns form "Sahaj"
The date for advance tax is 15th of every last month of the quarter [ie 15th June, 15 Sept, 15th Dec, 15th Mar]. Refer to http://law.incometaxindia.gov.in/DitTaxmann/IncomeTaxActs/2005ITAct/section211.htm