In the Finance Act 2022, a new TDS section 194S, has been inserted in the Income Tax Act, and which has been made applicable e.f. 1st July’2022.
Accordingly, any person (Resident or Non-Resident) responsible for paying to any resident, any sum by way of consideration for transfer of virtual digital assets (VDA), to deduct TDS u/s 194S.
Any person (Resident or Non-resident), who is responsible for paying to any resident, any sum by way of consideration for the transfer of virtual digital assets (VDA) to deduct tax at source (TDS) at a rate of 1%. The TDS 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. GST and charges levied by the deductor for rendering service is to be excluded, for the Purpose of TDS Deduction.
Payment on transfer of virtual digital asset
Any person responsible for paying to a resident any sum by way of consideration or transfer of a virtual digital asset, shall, at the time of credit of such sum to the account of the resident or at the time of payment of such sum by any mode, whichever is earlier, deduct an amount equal to one percent. of such sum as income-tax thereon:
Provided that in a case where the consideration for transfer of virtual digital asset is––
- wholly in kind or in exchange of another virtual digital asset, where there is no part in cash; or
- Partly in cash and partly in kind but the part in cash is not sufficient to meet the liability of deduction of tax in respect of the whole of such transfer,
the person responsible for paying such consideration shall, before releasing the consideration, ensure that tax has been paid in respect of such consideration for the transfer of virtual digital assets.
No tax shall be deducted in a case, where–
- 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
- the consideration is payable by any person other than a specified person and the value or aggregate value of such consideration does not exceed ten thousand rupees during the financial year.