Key changes effective July you need to know about

2 Jul 2022 , 08:23 AM

There is a lot occurring in July, including cryptocurrency transfers, gifts for social media celebrities, IT returns, mutual fund investments, etc.
The operational and statutory changes you should be aware of are listed below.

There are several significant financial developments that will have an impact on your money in July, regardless of whether you invest in mutual funds, love cryptocurrencies, or pay income taxes. Continue reading to learn what they are.

TDS for transactions of cryptocurrencies

Your cryptocurrency sale transactions starting on July 1 will be subject to a 1% TDS (Tax Deducted at Source). To record the specifics of all transactions involving virtual digital assets, TDS is levied on cryptocurrency transfers (VDAs).

If the total sale consideration for VDA exceeds Rs10,000 in any fiscal year, TDS at a rate of 1% will be withheld from the payment of the sale value. This will apply to all VDA transfers, including those using cryptocurrencies and non-fungible tokens (NFTs).

For designated persons, which includes individuals and Hindu Undivided Families, the threshold limit for TDS is Rs50,000. (HUFs). When paying the seller or transferring the consideration to the seller, TDS must be subtracted. For example, if a VDA is being purchased for Rs1 lakh, Rs1,000 (1% of Rs 1 lakh) must be subtracted, and the remaining Rs99,000 must be given to the VDA seller.

The buyer, an exchange, or a broker making the payment to the seller is responsible for withholding the TDS. That implies TDS must be subtracted from the selling price, and then the remaining funds can be transferred to the seller

Influencers who accept gifts will be taxed on them

Businesses frequently pay social media influencers in kind. From July 1, certain presents or benefits will be taxed. However, there won't be any tax on the gift if the influencer returns it.

Celebrities, experts or authorities in a certain industry, or those with a personal connection to their audience can all be social media influencers. The products that these influencers recommend or review are frequently kept by them. These goods might be very expensive; examples include pricey smartphones, pricey jewellery, or even an automobile.

All such transactions are covered under the new section 194R. According to this clause, TDS will be applied at a rate of 10% to any benefits or perks offered if they are related to a person's job or business and their total annual value exceeds Rs20,000.

The new tax rule has a wider scope than just social media influencers, according to the CBDT. For instance, many businesses offer incentives in the form of holiday packages to top-performing distributors or dealers who meet their sales goals. Under the new section, businesses are required to adhere to TDS regulations, and dealers and distributors are required to report the value of these benefits on their tax returns.

Doubled fine for failing to link PAN with Aadhaar

For those who missed the March deadline to connect their permanent account number (PAN) with their Aadhaar number, the Central Board of Direct Taxes has quadrupled the penalties. Since July 1, the fine has doubled to Rs1,000. The fine in June was Rs500.

Do your taxes right now

The financial year 2021—22 (the assessment year 2022—23) income tax return filing deadline is July 31. Instead of waiting until the last minute, begin the activity straight immediately.

If the deadline is missed but the process is finished by December 31, you will be required to pay a penalty of Rs5,000. However, the late filing cost is only allowed to be up to Rs1,000 if your income is less than Rs 5lakh.

New guidelines for mutual fund investing

Mutual fund investments cannot be started from a pool account as of July 1. As required by the securities and exchange board of India, the investor's bank account must transfer the funds to the mutual fund house's bank account (SEBI). This will be implemented by all stock exchange-backed transaction systems.

Investors and distributors in mutual funds had previously voiced concerns about things like delayed confirmations of unit allotments, the inability to pay with a check, RTGS and NEFT failures, and unsuccessful SIP transactions, among other things.

All SIPs will now halt where your broker used to send money from the balance of your broking account to the mutual fund house. You must fill out new National Automated Clearing House (NACH) mandates online in support of the clearing organization. As the sale proceeds will now go into your bank accounts and not your broking account, make sure the correct bank accounts are linked with your mutual fund folios. All unit sales transactions must have two-factor authentication.

Credit cards from HDFC Bank now have standing instruction return fees

As of July 1, HDFC Bank will charge you a fee if the standing order to pay your invoices is unsuccessful. Following the payment attempt, the cardholder will be assessed standing instruction return fees based on the net payable amount. The cardholders have been advised by the bank of this.

Let's say a cardholder from HDFC Bank has chosen to get standing instructions regarding the total amount owed. Now, if the system only recovers the minimum amount due (the standing instruction amount, which is the monthly card bill) of Rs500 owing to insufficient funds in the designated account, a payment return charge will be assessed on the net payable amount of Rs9,500. (Rs10,000 less Rs500).

A payment return fee will be assessed on the net payable amount of Rs9,800 if the system is only able to recover a partial amount, such as Rs200, which is less than the minimum amount due (i.e., Rs10,000 minus Rs200).

Even if you only pay the minimum amount required, interest will still be charged on the entire amount still owed.