Income tax rules: Three changes from today — explained

Income tax rules: After ushering in Q2FY23, three major changes in the income tax rules proposed in the union budget 2022 have become a reality. One of the rules being doubling of late fee on PAN-Aadhaar linking. From today, the late fee for PAN-Aadhaar seeding has risen from ₹500 to ₹1,000. 

Apart from this, one per cent Tax Deduction at Source (TDS) on all cryptocurrency transactions will be levied from Q2FY23 onwards i.e. from today. Meanwhile, from today, 10 per cent TDS on monetary benefits received via sales promotion on social media influencers and doctors has become applicable as well.

Here we list out 3 important changes in income tax rules from today:

1] Double fee for PAN-Aadhaar linking: Last date for Aadhaar-PAN linking has expired on 30th June 20222. As per the CBDT guidelines, if a person links its PAN with Aadhaar after 31st March 2022 to 30th June 2022, he or she will have to pay a late fee of ₹500. However, if a person fails to link PAN with Aadhaar by 30th June 2022, then he or she will have to pay double fine of ₹1,000 for PAN-Aadhaar seeding from 1st July 2022. As we are in Q2FY22 now, so, one will have to pay ₹1,000 for PAN-Aadhaar seeding.

2] TDS on cryptocurrencies: After imposition of 30 per cent flat income tax on cryptocurrencies from 1st April 2022, the GoI had proposed an addition 1 per cent TDS on cryptocurrency transactions in the union budget 2022, irrespective of the gain or loss incurred by the investor. The budget proposal had become effective from today. However, an investor would be able to claim refund of TDS levied on transactions involving losses. So, a cryptocurrency investor is advised to file ITR, if it has entered into cryptocurrency transactions.

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 doctors, influencers: In the Union Budget 2022, the GoI inserted a new section 194R in the income tax act 1961. This new section proposes 10 per cent TDS on benefits received via sales promotion on doctors and social media influencers. This budget proposal has become applicable from 1st July 2022 i.e. today. However, the TDS will be applicable only when the cost of the benefit is ₹20,000 or more in single financial year.

On how Section 194R would work, SEBI registered tax and investment expert Jitendra Solanki said, “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.”