Buyers have to deduct TDS in exchange for cryptocurrencies says CBDT

Buyers have to deduct TDS in exchange for cryptocurrencies says CBDT The Central Board of Direct Taxes (CBDT) clarified on Tuesday that in the case of the transfer of virtual digital assets (VDA) in a peer-to-peer transaction (buyer to the seller without using an exchange), the buyer will deduct a 1% tax deducted at the source (TDS) before giving the seller the payment in question. "Thus, in a peer-to-peer (i.e. buyer to the seller without going through an Exchange) transaction, the buyer (i.e. person paying the consideration) is required to deduct tax under section 194S of the Act," the CBDT said. Concerning the obligation to withhold tax at source under Section 194S of the Act when the consideration is in kind or in exchange for VDA, the CBDT stated that in this case, the person responsible for paying the consideration must ensure that the tax required to be withheld has been paid in respect of such consideration before releasing the consideration. Additionally, before releasing the consideration, the person responsible for paying the consideration must make sure that the tax that must be deducted in respect of the consideration has been paid. This is true if the consideration is in kind or in return for VDA. The earlier VDA circular, according to Amit Maheshwari, Tax Partner at AKM Global, a tax and consulting firm, didn't address the withholding requirements for peer-to-peer transactions. CBDT recommendations for virtual digital assets Last week the income tax agency published comprehensive instructions on TDS for VDAs like cryptocurrency, stating that exchanges must withhold TDS if transactions take place on or through the exchange.