Changes effective from-01.07.2022 in Direct and Indirect Taxation

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As you all know there are very frequent changes in our regulatory provisions.

Eazybahi has come up with the brief of all changes in Income tax laws and GST laws which are to be effective with effect from 01.07.2022.

CHANGES APPLICABLE WEF 01.07.2022 IN DIRECT TAXATION (INCOME TAX)

& INDIRECT TAXATION (GST)

CHANGES TO BE EFFECTIVE RELATING TO INCOME TAX –

1. New higher Late fees will be applicable for PAN Aadhar Link

• The due date of PAN Aadhar Link was 31.03.2022 now late fees is applicable.
• Upto 30.06.2022 the late fees applicable on PAN Aadhar Link is Rs 500/-
• With effect from 01.07.2022 the late fees will increased to Rs 1000/-
• If yet not linked avoid higher late fees and link your PAN Aadhar on Income tax portal.

2. New TDS Section- 194R will be effective from 01.07.2022-

• SECTION-194R – Deduction of Tax on benefit or perquisite in respect of business or profession.
• RATE APPLICABLE- 10%
• LIMIT- No TDS upto Rs 20,000/-
• WHO IS LIABLE TO DEDUCT TAX: Persons liable for tax audit in the preceding previous year.
• WHEN TO DEDUCT TAX UNDER SECTION- 194R– At the time, when the benefit/perquisite is provided.
• NON-APPLICABILITY OF SECTION- Individual/ HUF carrying on business whose turnover is upto Rs 1 crore or carrying on profession has receipts upto Rs 50 Lakhs.
• NATURE OF BENEFIT COVERED- Benefit provided by businessman due to its business to its agent provided in kind or benefit in kind and cash (i,e benefit solely in cash is not covered in this section) if the aggregate value of such benefits exceeds Rs 20,000 during the financial year.
• EXAMPLE ON SECTION -194R-

• • • Mr Hari operates a business of Electronic Items. Om is the agent of Mr Hari who assist in the business of Mr. Hari. Om executed sales of Rs 1 crores within a period 6 months his owner offered the agent a trip to Mauritius cost of which was Rs 2,50,000.
    • The expenses incurred by Mr Hari on trip of Om (his agent) was claimed by Mr Hari as a Business Promotion Expenses.
    • On the other hand, the benefit of Rs 2,50,000 received by Om from Mr Hari was not recorded as income.
    • Section- 194R -therefore focus on Deduction of Tax at source on this amount of Rs 2,50,000. Mr Hari is required to deduct tax on Rs 2,50,000 at the rate of Rs 10% and Om is required to record such income in its books.

• APPLICABILITY OF SECTION-194R– For the purpose of applicability of the section-Limit mentioned in Section – 194R of Rs 20,000 the period starting from – 01.04.2022 will be considered i,e as on 01.07.2022 benefits provided upto 30.06.2022 will also be covered . However, TDS provisions will be applicable on any benefit or perquisite provided on or after 1^st July 2022.

For example -If in the above example Mr Hari has provided a benefit/perquisite of upto Rs 25,000 to Om within period from 01.04.2022 to 30.06.2022 then Section – 194 R is applicable. However, no TDS is required to be deducted on amount of Rs 25,000. Mr Hari provided a benefit of Rs 10000 in the month of July. TDS is required to be deducted on Rs 10,000(benefit provided wef 01.07.2022).

• Also some guidelines for removal of difficulties on Section -194R were issued by CBDT through Circular vide no 12 Dated 16.06.2022 which should also be referred.

3. New TDS Section- 194S will be effective from 01.07.2022-

• SECTION-194S – TDS on Payment on transfer of Virtual Digital Assets or cryptocurrencies or NFT’s( Non- fungible token).
• RATE APPLICABLE- 1% of such sum
• WHO IS LIABLE TO DEDUCT TAX: Payer is required to deduct the tax on the transaction.
• NO TDS- upto Rs 10,000 for other than specified persons, upto Rs 50,000 for specified persons.
• THRESHOLD LIMIT- exceeding Rs 50,000 a year for specified persons which include individuals/ HUF’s who are required to get their accounts audited under the IT Act.
• TDS DEPOSIT- Deductor shall deposit the tax within 30days from the end of the month in which the deduction has been made. The deposit shall be made in the challan cum statement Form- 26QE.
• OVERRIDING EFFECT- Section-194S has overriding effect. Section 194-O applicable on ECO’s shall not be applicable if Section-194S is applicable. Also Section- 203A and 203AB (for specified person) shall not apply in this case.
• For example- Mr A purchased bitcoins on Open Cu’s platform of Rs 5,00,000. TDS is to be deducted on this cryptocurrency purchased by Mr A on Rs 5,00,000 at the rate of 1%.

Specified persons for the purpose of this provision-

• An Individual or HUF who does not have any income under the head PGBP and
• An Individual or HUF having income under the head PGBP whose total sales/gross receipts/turnover from business carried on by him does not exceed 1 crore Rs or in case of profession exercised by him foes not exceeds 50Lkah Rs. This threshold is to be seen in the financial year immediately preceeding the financial year in which the Virtual Digital assets is transferred.
• Also some guidelines for removal of difficulties on Section -194S were issued by CBDT through Circular vide no 13 Dated 22.06.2022 which should also be referred.

CHANGES TO BE EFFECTIVE RELATING TO GST –

1. GST Validation Criteria applicable on Annual Aggregate Turnover wef 01.07.2022

• Annual Aggregate Turnover is a basis for selection of HSN category Type, Late fees calculation, Interest Calculation, QRMP selection, Composition scheme selection.
• Therefore, it is important to note that the Annual Aggregate Turnover plays an important role the correctness of which is vital for GSTIN Holders.
• Compliance to be done–Any pending GST Returns relating upto March 2022, should have been filed until 30.06.2022.

Let us understand the now Validation Criteria which will be implemented automatically on GST Portal wef-01.07.2022 –

• The relation of Aggregate turnover with validation criteria-“When GST returns are filed by the GSTIN holders, turnover value is updated dynamically as per filing of returns. Aggregate Turnover is updated dynamically based upon the filings done by all GSTINs under the PAN. Final turnover & Aggregate Turnover will be made available post tax officers verification /validation which will be on 01.07.2022.”
• Final turnover & Aggregate Turnover -This also means that the Final turnover & Aggregate Turnover will be considered as final on the basis of returns that have been filed by GSTIN holders until 30.06.2022 or figures prevailing as on -01.07.2022. No changes can be made on the figures after 30.06.2022.
• Conclusion–Therefore, the GSTIN holders are required to file there pending return upto March 2022 if not yet filed. As the failure of which would result in incorrect Annual Aggregate Turnover on the portal.

Stay tuned with Eazybahi for more such on due date compliances, live updates and changes in all laws. Also if you are in need of any taxation services, audit services , any consultancy services or any other legal compliances reach us at below mentioned details.

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