Before discussing on major income tax changes effective from July 1st let discuss what Income tax is an income tax is a direct tax levied by the government on the earnings of its inhabitants. The Income Tax Act of 1961 requires the national government to collect this tax. The government can adjust the income levels and tax rates in the Union Budget every year. New effective alterations have been decided to apply to tax changes from July 1. Income does not just refer to monetary compensation. So, today we will discuss the 3 income tax changes effective from July 1–3. With July come a few novel changes to income tax legislation that will affect many people.
Here are three significant income tax changes effective from July 1st, 2022.
TDS on Cryptocurrencies is Major and 1st Income Tax changes effective from July 1st .
This is the first income tax changes effective from July 1-3. At the Union Budget 2022–23 debate in Parliament on February 1, Finance Minister Nirmala Seetharaman imposed a 1% tax deducted at source (TDS) on the transfer of virtual digital assets (VDAs)—or simply put, crypto and non-fungible tokens—during the Union Budget 2022–23 debate on February 1(NFTS). 1% TDS on payments for virtual digital assets or Cryptocurrency exceeding rupees 10,000 annually (as per the Finance Act, 2022).
If the deductee’s (buyer’s) PAN is not easily available at the time of VDA transfer, the tax will be deducted at a rate of 20%. Furthermore, if the payer is not one of the aforementioned persons, TDS will be withheld at a higher rate of 5% (rather than the customary rate of 1%) if the individual has not filed his or her income tax return. This innovative change will be seen from July 1-3.
PAN-Aadhaar Linking fine is 2nd Income Tax changes effective from July 1.
This is the second income tax changes effective from 1st July. If the PAN-Aadhaar linking is completed on or after July 1, 2022, a charge of Rs 1,000 would be levied. Previously, the price was Rs. 500 till June 30. When a person joins their PAN and Aadhaar, they must first pay the penalty and then request to link their PAN and Aadhaar once the payment is shown in the e-filing portal.
TDS rule for doctors, social media influencers is 3rd Income Tax changes effective from July 1.
This is the third income tax change effective from July 1. Doctors and social media influencers will be subject to a 10 percent tax deduction at source (TDS) beginning July 1, 2022, on benefits received from companies for sales promotion. According to a statement from the Central Board of Direct Taxes (CBDT), the giver of the benefit or perquisite may immediately deduct the tax under Section 194R; however the taxpayer must verify the recipient’s ownership of any taxable funds.
“Section 194R-Deduction of tax in the case of any advantage or emolument given and the aggregate value of such benefit or perquisite exceed Rs.20,000,” says Section 194R.
The benefit or perquisite must be derived from the resident’s business or occupation.
The most recent rule pertaining to TDS would take effect on July 1, 2022. In Budget 2022-23, the government stated the new TDS section 194R in the Income Tax Act. The modified clause stated that any individual who provides any benefit or perquisite worth more than Rs 20,000 per year to a resident must deduct a 10% TDS. According to Kamlesh C Varshney, Joint Secretary in the Finance Government, the ministry will explain any ambiguities about the applicability of the revised TDS on the advantages and disadvantages.