Advance tax
In the case of income from salary, since the annual income tax due is computed in advance by the employer and applicable taxes are deposited as TDS, employees are not required to deposit advance tax. However, in the case of moonlighting, one earns income other than income from salary and accordingly, may be required to deposit advance taxes on such side income.

Computation of taxable income
The income tax, both in the case of income from salary and income from business and profession, is calculated at the applicable slab rate of the individual. However, the difference is the method of computation of taxable income.

In the case of salary, taxable income is computed after providing for a standard deduction of `50,000 and other deductions like HRA, LTA etc. For income from business and profession, one is allowed to pay taxes on his net income; that is, after deduction of all business expenses including depreciation of assets used for business such as AC, furniture, laptops, etc. One can also offer income at a deemed profit rate of 50% if the total income is below Rs 50 lakh in the previous year.

Filing of return of income
The ITR 1 is not applicable for those who have income from business and profession. They should file their file their taxes in ITR 3 or ITR 4.

Knowing the difference in taxability between income from salary and income from profession, can enable accurate computation of taxable income and help avoid interest payments.