TMI BlogOrder under section 119 of the Income-tax Act, 1961 (the Act) in relation to tax deduction at source under section 194S of the Act for transactions other than those taking place on or through an ExchangeX X X X Extracts X X X X X X X X Extracts X X X X ..... 2022 inserted a new section 194S in the Act with effect from 1st July 2022. The new section mandates a person, who is responsible for paying to any resident any sum by way of consideration for transfer of a virtual digital asset (VDA), to deduct an amount equal to 1% of such sum as income tax thereon. The tax deduction is required to be made at the time of credit of such sum to the account of the resident or at the time of payment, whichever is earlier. This deduction is not required to be made in the following cases:- (i) the consideration is payable by a specified person and the value or aggregate value of such consideration does not exceed fifty thousand rupees during the financial year; or (ii) the consideration is payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell trades and executes the same on its application or platform. Same definition applies to this circular. For all other transactions (not covered by circular no 13/2022 ), this circular is being issued under section 119 for proper administration of the Act. 1) Liability to deduct tax at source under section 194S of the Act when the consideration is other than in kind According to section 194S of the Act, any person who is responsible for paying to any resident any sum by way of consideration for transfer of VDA is required to deduct tax. Thus, in a peer to peer (i.e. buyer to seller without going through an Exchange) transaction, the buyer (i.e person paying the consideration) is required to deduct tax under section 194S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed to pay tax with respect to transfer of VDA and show the evidence to other so that VDAs can then be exchanged. This would then be required to be reported in TDS statement along with challan number by both of them. This year Form 26Q has included provisions for reporting such transactions. For specified persons, Form 26QE has been introduced. 3. Interplay between provision of section 194S and section 194Q Without going into the merit whether VDA is goods or not, it is clarified that once tax is deducted under section 194S of the Act, tax would not be required to be deducted under section 194Q of the Act. Ankit Jain Under Secretary (TPL)-III - Circular - Trade Notice - Public Notice - Instructions - Office ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
