Income Tax: 3 changes to be effective from 1st July 2022

With July comes a few new changes to income tax rules applicable to different taxpayers. Here is a look at three important income tax related changes that will come into effect from July 1, 2022.

1. TDS on cryptocurrencies

Earlier this year, the Finance Minister Nirmala Sitharaman proposed a 1% tax deducted at source (TDS) on any payment made in exchange for the transfer of virtual digital assets (VDAs), often known as cryptocurrency and non-fungible tokens (NFTs). For transactions totaling more than Rs 10,000, the TDS rule will go into effect on Friday, July 1.

The tax at the time of transfer of VDA will be deducted at the rate of 20% if the deductee (buyer's) PAN is not readily available. Additionally, if the payer is not one of the specified people, TDS will be withheld at a higher rate of 5% (as opposed to the usual rate of 1%) if the individual has not submitted his or her income tax return.

2. PAN Aadhaar linking fine

A fee of Rs 1,000 would be applicable if the PAN-Aadhaar link is completed on or after July 1, 2022. Earlier, till June 30, the charge was Rs. 500. So when an individual links their PAN and Aadhaar, they first have to pay the penalty and request to link PAN Aadhaar once the payment reflects in the e-filing site.

3. TDS rule for doctors, social media influencers

Doctors and social media influencers will be subject to 10 percent tax Deducted at Source (TDS) beginning July 1, 2022, on benefits received from companies for sales promotion. The provider of the benefit or perquisite may directly deduct the tax under Section 194R, according to a notification from the Central Board of Direct Taxes (CBDT), although the taxpayer must verify the recipient's possession of any taxable amounts.

According to section 194R, 'Section 194R - Deduction of tax in case any benefit or perquisite is provided and aggregate value of such benefit/perquisite exceeds Rs. 20,000

Note: Benefit or perquisite should be arising from business or the exercise of a profession by such resident.

If the total value of benefits or perks received throughout the financial year is less than Rs. 20,000, there would be no TDS.