Moonlighting in India: what to read before a side business

The short answer

Before you moonlight, start with your own papers: the appointment letter, your employer’s policies and, in some workplaces, standing orders. Find the clauses on exclusive service, outside work, conflicts, IP and confidentiality, and ask in writing where they need a yes. The law sets the edges: section 27 of the Contract Act voids a restraint of lawful trade “to that extent”, and your employer is the first owner of copyright in work made in the course of your job, unless you agree otherwise (sources 1 and 2).

In general, section 27 is read as not reaching a restriction that applies while you are still employed, unless the contract is unconscionable, excessively harsh, unreasonable or one-sided (source 8). So don’t assume an exclusive-service clause is void: ask an advocate.

Checked against the official texts of the Acts, the Model Standing Orders, 2026, the Income-tax Act, 2025 and a 2025 Supreme Court judgment.

From Read Your Contract, the nine clausesLook inside Read Your Contract

Where do the rules live?

Rarely in one place. Look in each of these, and ask HR in writing for the current versions of any policy your letter refers to:

The offer and appointment letters, or the employment agreement.
The code of conduct.
HR policies on outside work, conflicts of interest, intellectual property, and the use of company devices.
Certified standing orders, if your workplace has them.
Service rules, if you work for a government, a public sector body or a bank.

Which clauses should you look for?

The nine clauses to find before you start anything beside your job
No.	Words to search for	Clause
C1	whole time, exclusively, devote	Exclusive service
C2	outside employment, moonlighting, dual employment	Outside work
C3	conflict, disclose, declaration	Conflict of interest
C4	inventions, work product, assign	Intellectual property
C5	confidential, company property, acceptable use	Confidentiality and devices
C6	solicit, entice, clients, employees	Non-solicitation
C7	compete, competing business	Non-compete
C8	notice period, garden leave, bond	Notice, garden leave and bonds
C9	working hours, on call, availability	Hours and availability

For each one, write down where it is, its exact words, and whether it asks for nothing, a disclosure or a permission. “Not found” is a result too.

What does the law say?

Restraint of trade. “Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void” (section 27, Indian Contract Act, 1872; source 1). The Supreme Court, repeating its earlier ruling, said in 2025 that negative covenants during employment are “generally not regarded as restraint of trade”, unless the contract is unconscionable, excessively harsh, unreasonable or one-sided, and that the employer carries the burden of showing a restrictive covenant is valid. That case was about a minimum-service bond (source 8, paragraphs 13 and 21). How this applies to your clause is a question for an advocate.
Work made in your job. For a work made “in the course of the author’s employment under a contract of service”, the employer is the first owner of the copyright, “in the absence of any agreement to the contrary” (section 17(c), Copyright Act, 1957; source 2). Keep your own work on your own time and devices, and read C4 closely.
Standing orders. The service sector schedule of the Model Standing Orders, 2026 (notified 8 May 2026) bars extra employment that may adversely affect the employer’s interest. The employer may permit it, with or without conditions, and permission comes first (paragraph 21). On leave, no employment or vocation for profit (paragraph 11(9); source 3). The Industrial Relations Code’s standing-orders chapter covers industrial establishments with 300 or more workers, and “worker” is a defined term (sections 28 and 2(zr); source 4). Ask HR whether yours cover you.
Government servants. Central Government servants have the CCS (Conduct) Rules, 1964. The DoPT’s note on rule 15, written about holding an elective office, says “the entire time of the Government servants should be available to the Government” (source 5). Read your own service rules before anything else.

This is general information about the texts, not legal advice. For your own contract, ask an advocate.

How do you ask?

In writing, before the first sale. Say what you plan to do and in which hours, name the clauses you read, and say you won’t use the employer’s time, devices, information, clients or colleagues. Keep the reply with your notes. A written yes, with its conditions, is worth more than a hallway one.

What about tax and GST?

Income tax. Side income from a business or profession is taxed under “Profits and gains of business or profession”, and section 58 may let you count a set share as profit (source 6). The section 58 guide explains it.
Advance tax. If your tax for the year, after the TDS on your salary, is ₹10,000 or more, you pay in advance (sections 404 and 405). The advance tax guide has the dates.
GST. Your salary isn’t a supply for GST (Schedule III, paragraph 1; source 7). The ₹20 lakh line counts the side business’s supplies: see the GST registration guide.

From the kit. Read Your Contract takes the nine clauses one at a time: the words to search for, the usual patterns, the red flags, and the letter to ask in writing. This is its overview page.

Free: the weekly card from Beside the Job, for the hours you keep.

Questions to ask an advocate and your CA

Advocate: does my exclusive-service clause reach a small business on my own time?
Advocate: who owns what I make outside work hours, under my IP clause?
Advocate: do standing orders cover my role?
CA: is my side income business or profession, and does section 58 fit it?
CA: how much should I set aside for advance tax this year?

Sources

Legislative Department, India Code. The Indian Contract Act, 1872. Section 27. Primary source. Read on 20 October 2026.
Copyright Office, Government of India. The Copyright Act, 1957. Section 17(c). Primary source. Read on 1 November 2026.
Ministry of Labour and Employment. Model Standing Orders, 2026, S.O. 2312(E), 8 May 2026. Schedule C (service sector), paragraphs 11(9) and 21. Primary source. Read on 1 November 2026.
Ministry of Labour and Employment. The Industrial Relations Code, 2020. Sections 2(zr) and 28(1). Primary source. Read on 1 November 2026.
Department of Personnel and Training. Sanction for holding an elective office by a Government servant, updated 31 August 2022, on rule 15 of the CCS (Conduct) Rules, 1964. Primary source. Read on 1 November 2026.
Ministry of Law and Justice. The Income-tax Act, 2025 (No. 30 of 2025), the Gazette of India, 21 August 2025. Sections 58, 404 and 405. Primary source. Read on 1 November 2026.
Central Board of Indirect Taxes and Customs. Schedule III, CGST Act, 2017. Paragraph 1. Primary source. Read on 1 November 2026.
Supreme Court of India. Vijaya Bank v. Prashant B Narnaware, 2025 INSC 691, 14 May 2025. Paragraphs 11, 13, 14 and 21, quoting Niranjan Shankar Golikari v. Century Spinning and Manufacturing Co. (1967). Primary source. Read on 1 November 2026.

What changed in this guide

1 November 2026. Sources read again before publishing, and source 8 added. India Code’s copy of the Contract Act (source 1) wouldn’t open that day, so section 27’s words were checked in the High Court of Andhra Pradesh’s copy.
20 October 2026. Written, and checked against the sources above.