New rules from July 1: Labour code, crypto TDS, single-use plastic ban

We’re now in the second half of 2022. From today (July 1), the Union government’s four new labour codes are likely to come into effect. Besides these codes, there are other new rules on income tax, TDS on cryptocurrency transactions and a ban on single-use plastic set to kick off from Friday.

According to the Union government, 29 labour laws have been codified into four new labour codes – the Code on Wages, Industrial Relations Code, Social Security Code and the Occupational Safety, Health and Working Conditions Code.

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“As per available information, 27, 23, 21 and 18 States/UTs have pre-published draft Rules under the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020 respectively,” Rameswar Teli, Minister of State for Labour and Employment told the Rajya Sabha in March.

“All codes were placed on the website of the Ministry of Labour and Employment, inviting comments from all stakeholders including general public. Nine tripartite consultations were undertaken on all the four Codes on 10.03.2015, 13.04.2015, 06.05.2015, 14.07.2015, 06.10.2015, 04.10.2017, 22.11.2018, 27.11.2018 and 05.11.2019 inviting all Central Trade Unions, Employers’ Associations and State Governments. The stakeholders had participated in the afore-said tripartite meetings and gave suggestions on various aspects of Labour Codes,” he added.

New labour codes take effect

Under the new labour codes, the daily working hours will be capped from the current 8-9 hours to 12 hours while the weekly working hours are capped at 48 hours. Overtime has been increased from the present 50 hours to 125 hours in a quarter across industries.

As per the new labour codes, if the companies opt for 12 hours per day work for their employees, then it will be a four-day week with three off days.

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According to the new codes, a company has to make a full and final settlement to an employee within two working days of his last day at the organisation. The same rule applies to those who have been dismissed from service.

“Where an employee has been – removed or dismissed from service; or retrenched or has resigned from service, or became unemployed due to closure of the establishment, the wages payable to him shall be paid within two working days of his removal, dismissal, retrenchment or, as the case may be, his resignation,” the new code stated.

As per the new labour laws, the basic salary of an employee will have to be at least 50% of the gross income. With this, the take-home salary will decrease as the employees will be making more contributions to their EPF accounts and gratuity. Retirement benefits and gratuity will also increase.

Income Tax rules set in

As per the government, if you are linking your PAN card with Aadhaar from April 1 to June 30, the late fee was ₹500. From July 1, the penalty has been doubled to ₹1,000. The deadline for PAN-Aadhaar has been extended till March 31, 2023.

“In order to mitigate the inconvenience to the taxpayers, as per Notification No.17/2022 dated 29th March, 2022, a window of opportunity has been provided to the taxpayers up to 31st of March, 2023 to intimate their Aadhaar to the prescribed authority for Aadhaar-PAN linking without facing repercussions. As a result, taxpayers will be required to pay a fee of Rs. 500 up to three months from 1st April, 2022 and a fee of Rs.1000 after that, while intimating their Aadhaar,” the Ministry of Finance said on March 30.

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“However, till 31st March, 2023 the PAN of the assessees who have not intimated their Aadhaar, will continue to be functional for the procedures under the Act, like furnishing of return of income, processing of refunds etc. A detailed Circular No.7/2022 dated 30.03.2022 has also been issued in this regard. After 31st March, 2023, the PAN of taxpayers who fail to intimate their Aadhaar, as required, shall become inoperative and all the consequences under the Act for not furnishing, intimating or quoting the PAN shall apply to such taxpayers,” it added.

“Fee of Rs 500 payable if linked up to 30/06/22, else fee payable is Rs.1000. Fees to be paid by Challan No ITNS 280 with Major head 0021 (Income Tax Other than Companies) & Minor head 500 (Fee). Try to link after 4-5 working days from date of payment,” the Income Tax Department said recently.

Crypto tax kicks off

From Friday, the 1% tax deduction at source (TDS) rule on cryptocurrency transactions of over ₹10,000, will come into effect. Earlier, the government had introduced a 30% tax on virtual digital assets (VDAs).

According to the Central Board of Direct Taxes (CBDT), “The buyer of a VDA is required to deduct 1% of the amount paid to the seller as TDS. The tax is required to be deducted at the time of credit of the amount or at the time of payment to the resident individual, whichever is earlier. The tax will be deducted only if the amount paid exceeds the specified limit.”

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In this year’s Budget, a new section – 194R was brought in the I-T Act which requires a TDS of 10% by any person, providing any benefit or perquisite exceeding ₹20,000 in a year to a resident, arising from the business or profession of such resident.

Section 194R shall apply to sellers giving incentives, other than discounts or rebates, which are in cash or kind e.g., car, TV, computers, gold coin, mobile phone, sponsored trip, free tickets, medicine samples to medical practitioners.

The new provision comes into effect from July 1.

CBDT clarified that in the case of doctors receiving free samples of medicines while employed in a hospital, Section 194R would apply on the distribution of free samples to the hospital. The hospital as an employer may treat such samples as a taxable prerequisite for employees and deduct tax under Section 192. In such cases, the threshold of ₹20,000 has to be seen with respect to the hospital.

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For doctors working as consultants with a hospital and receiving free samples, TDS would ideally apply on the hospital first, which in turn would require to deduct tax under Section 194R with regard to consultant doctors.

To remove this difficulty, CBDT clarifies that as an alternative, the original benefit or perquisite provider may directly deduct tax under Section 194R with regard to the consultant doctor as a recipient. Section 194R shall not apply if the benefit or perquisite is provided to a government entity, like a government hospital, not carrying on business or profession.

There’s a ban on single-use plastic 

The manufacture, import, stocking, distribution, sale and use of identified single-use plastic items, which have low utility and high littering potential, have been banned all across the country from July 1.

This was announced by the Ministry of environment, forest and climate change on June 28.

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To phase out single-use plastic items by 2022, the ministry notified the Plastic Waste Management Amendment Rules, 2021, on 12 August 2021.

List of banned items

The list of banned items includes earbuds with plastic sticks, plastic sticks for balloons, plastic flags, candy sticks, ice-cream sticks, polystyrene (thermocol) for decoration, plastic plates, cups, glasses, cutlery such as forks, spoons, knives, straw, trays, wrapping or packing films around sweet boxes, invitation cards, cigarette packets, plastic or PVC banners less than 100 micron, stirrers.

“For effective enforcement of ban on identified SUP items from 1 July 2022, national and state-level control rooms will be set up and special enforcement teams will be formed for checking illegal manufacture, import, stocking, distribution, sale and use of banned single use plastic items. States and Union Territories have been asked to set up border check points to stop the inter-state movement of any banned single-use plastic items,” the ministry said.

The Plastic Waste Management Amendment Rules, 2021, also prohibit manufacture, import, stocking, distribution, sale and use of plastic carry bags having thickness less than 75 microns with effect from 30 September 2021, and having thickness less than thickness of one hundred and twenty microns with effect from the 31 December 2022.

(With inputs from agencies)