Highlights:
- A new section, 194R, was added to the Income Tax Act, 1961, as part of the Union Budget, introducing the TDS provision to stop tax revenue leakage.
- Anyone who receives gifts, freebies, or other benefits, including doctors and social media influencers, is required to pay 10% TDS for the incentives.
- Also, TDS at a rate of 1% has been suggested for transactions involving cryptocurrencies starting on July 1, 20222.
Three significant changes to the tax laws that were outlined in the union budget of 2022 will come into force at the end of Q1FY23. One of the guidelines is that the late cost for PAN-Aadhaar linking would be doubled. The late charge will increase to ₹1,000 from ₹500 starting on July 1st, 2022.
In addition, all cryptocurrency transactions will be subject to a 1% Tax Deduction at Source (TDS) starting on July 1st 2022. The 10% TDS on financial benefits earned from sales promotion on medical professionals and social media influencers will also be applicable starting tomorrow.
Here are 3 significant changes in income tax laws that will come into effect from July 1, 2022:
1. Double fee for PAN-Aadhaar linking: The deadline for linking PAN and Aadhaar is June 30, 2022. According to CBDT guidelines, if someone links their PAN with Aadhaar between March 31, 2022, and June 30, 2022, they must pay a late charge of ₹500. A double fine of ₹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 Govt. Of India will levy an additional 1% TDS on cryptocurrency transactions, regardless of the gain or loss incurred by the investor, after imposing a flat 30% income tax on cryptocurrencies beginning on April 1, 2022. An investor might, however, request a refund of TDS that was imposed on transactions that resulted in losses. Therefore, if a cryptocurrency investor has engaged in cryptocurrency transactions, they should submit an ITR.
Sujit Bangar, the founder of Taxbuddy.com, provided the following explanation of how TDS will be assessed on digital assets: “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. He further added, “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.”
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3. I-T rule change for influencers and doctors:
In the Union Budget of 2022, the Government of India added a new section, 194R, to the Income Tax Act of 1961. The 10% TDS on benefits obtained from sales promotion on doctors and social media influencers is proposed in this new section. However, the TDS won’t be applied until the benefit costs at least 20,000 in a single financial year.
Jitendra Solanki, a tax and investment expert registered with SEBI, explained how Section 194R would work: “If a private doctor is receiving samples from a drug maker company and the cost of all such samples received goes beyond ₹20,000 in one financial year, then it will attract 10 per cent TDS. However, if the doctor is employed at a private hospital, then in that case 10 per cent TDS will be levied on the hospital. It is important to know that Section 194R is not applicable on the government entities. So, if a doctor employed at a government hospital is receiving free medical samples, he or she need not to pay 10 per cent TDS.”
