Income Tax Regulations: Three Changes Explained Effective July 1

Income tax regulations: As of July 1, 2022, the late charge for PAN-Aadhar linkage would increase to Rs 1000.

Three significant modifications to the income tax laws that were outlined in the union budget of 2022 will take effect at the conclusion of Q1FY23. One of the guidelines is that the late cost for PAN-Aadhaar connection would be doubled. The late fee will increase to Rs 1,000 from Rs 500 starting on July 1st, 2022.

In addition, starting on July 1st 2022, all cryptocurrency transactions will be subject to a 1% Tax Deduction at Source (TDS) charge. The 10% TDS on financial gains earned from sales promotion on medical professionals and social media influencers will also be applicable starting tomorrow.

Here are 3 significant changes to income tax laws that take effect from July 1, 2022:

1. Double fee for PAN-Aadhaar linkage: The deadline for linking PAN and Aadhaar is June 30, 2022. According to CBDT regulations, if someone integrates their PAN with Aadhaar between March 31, 2022, and June 30, 2022, they must pay a late fee of Rs 500. A twofold fine of Rs 1,000 for PAN-Aadhaar seeding will be imposed starting on July 1st 2022 if a person fails to link their PAN with Aadhaar by June 30, 2022.

2. TDS on cryptocurrencies: The GoI will levy an additional 1% TDS on cryptocurrency transactions, regardless of the gain or loss experienced by the investor, after imposing a flat 30% income tax on cryptocurrencies as of April 1, 2022. An investor could, however, request a refund of TDS that was imposed on transactions that resulted in losses. Therefore, if a bitcoin investor has engaged in cryptocurrency transactions, they should file an ITR.

On how TDS will be levied on digital assets, Sujit Bangar, Founder at Taxbuddy.com explained, “From July 1, 20222, TDS at the rate of 1 per cent has been proposed for transaction involving cryptocurrency. Important point to note is that, we may sell cryptocurrency at profit or loss but TDS at the rate of 1 per cent would certainly happen. We can claim refund of TDS done on transaction involving loss. Therefore, it would be recommended to file income tax return if you have entered into transactions in cryptocurrency.”

3. I-T rule change for influencers and physicians: The Government of India included a new section 194R to the Income Tax Act of 1961 in the Union Budget of 2022. The 10% TDS on advantages obtained from sales promotion on physicians and social media influencers is proposed in this new section. However, the TDS won’t be applied unless the benefit costs at least 20,000 in a single fiscal year.