Here are key financial reforms that will come into effect from tomorrow, July 1, 2022:
PAN-Aadhaar linking to get costlier:
If you have not linked your PAN card with your Aadhaar card yet then get ready to shell out an extra amount from your pocket. According to the revised rule by the Central Board of Direct Taxes (CBDT), a penalty of ₹1,000 will be levied if the PAN-Aadhaar linking is done on or after July 1, 2022. Until June 30, the penalty was ₹500.
TDS on crypto transactions:
The Finance Act, 2022, inserted a new section, 194S, in the Income Tax (I-T) Act, 1961, with effect from 1 July. This section mandates the buyer of a virtual digital asset (VDA), to ensure that tax is deducted at source (TDS) at 1% of sale consideration. This means that if X sells bitcoin to Y, then Y will be required to deduct tax from the consideration payable to X, the seller.
Since the transactions for Virtual Digital Assets (VDAs) take place through an exchange. And, an exchange is only the mediator and not the buyer. Therefore, the tax department has clarified this situation.
So if X sells Ethereum to Y for ₹1 lakh via platform A. Suppose the charges levied by platform A for the transaction are ₹1,000. In this case, platform A will be required to deduct TDS on the net consideration after excluding GST/charges/commission. Hence, the TDS deducted by A will be ₹990 (1% of the net consideration of ₹99,000).
A 1% TDS on payments over ₹10,000 towards virtual currencies has also been introduced which will kick in from July 1. The threshold limit for TDS would be ₹50,000 a year for specified persons, which includes individuals/HUFs who are required to get their accounts audited under the I-T Act.
Tagging of Demat account:
Sebi has said all Demat accounts of stock brokers, which are untagged, need to be tagged by June end. Sebi said the credit of securities will not be allowed in any Demat account left untagged from July 1, 2022, onwards. However, credits on account of corporate actions will be permitted. The debit of securities would not be allowed in any Demat account left untagged from August 1, 2022.
New Labour codes:
From working hours to in-hand salary, several aspects concerning employment and work culture are expected to change if the new labour codes are implemented. The four broad codes on wages, industrial relations, social security, and occupational safety, health, and working conditions (OSH) have already been notified after getting the President's assent. But for implementing these four codes, the rules need to be notified.
Here’s how the new labour codes are likely to impact the working class:
a) Working hours: A regular working hour can become 12 hours in a day from 9 hours at present. If a company decides to opt for 12 hours shift, the working days would have to be capped at 4 days a week with 3 mandatory offs. In all, the week’s total working hours will remain unchanged at 48 hours.
b) Leaves: Previously the laws required to have worked for a minimum of 240 working days in a year to ask for leave. It will now be reduced to 180 working days.
c) Increased PF contribution: The take-home salary will go down as the PF contributions of the employees and the employer will increase. Under the new codes, the provident fund contribution is required to be a proportion of 50% of gross salary.
Income tax rule for social media influencers and doctors
Doctors, YouTubers, and influencers who receive free items from companies will have to pay taxes for those items from July 1. The social media influencers will be liable to pay 10% TDS if they receive a product like a car, mobile, outfit, etc, and retain the same. However, if the product is returned to the company after using the services, it will not fall under Section 194R.
