CBDT Notifies Guidelines for TDS on Virtual Digital Asset under sub-section (6) of section 194S of IT Act 1961

The Central Board of Direct Taxes(CBDT) vide Circular No. 13 of 2022 dated 22nd June 2022 notifies Guidelines for removal of difficulties under sub-section (6) of section 194S of IT Act 1961.

The Circular is Given Below:

Finance Act 2022 inserted a new section 194S in the Income-tax Act, 1961 (hereinafter referred to as “the Act”) with effect from 1st July 2022.

The new section mandates that anybody who pays any resident any amount as payment in exchange for the transfer of a virtual digital asset (VDA) deduct 1 percent of that amount as income tax. The tax deduction must be made as soon as the resident’s account is credited with the relevant sum or as soon as payment is received, whichever comes first.

In the following circumstances, this deduction is not necessary to be made:-

(i) the value, or the total value of such consideration for the financial year, is not greater than fifty thousand rupees, and the payment is payable by a specific person;

or

(ii) the amount of the consideration, or the total amount of the consideration, is not greater than ten thousand rupees throughout the financial year and is payable by any person other than a specified person.

For the purposes of this provision, the following are considered specified persons:

(i) an individual or Hindu undivided family (HUF) who does not earn any money from “profit and gains of business or profession”; and

(ii) A person or HUF receiving income under the heading “profits and gains of business or profession” whose total sales, gross revenues, or turnover from the business they own or operate doesn’t exceed Rs. 1 crore, or Rs. 50 lakh in the case of a profession they practise. This threshold point should be observed in the financial year that comes before the financial year in which the VDA is transferred.

The Central Board of Direct Taxes (CBDT) is empowered to establish guidelines with the Central Government’s permission under subsection (6) of section 194S of the Act in order to address challenges. These regulations, which must be put before each House of Parliament, have legal force and are binding on both the income-tax authorities and the person who is in charge of paying the consideration for the transfer of VDA.

To Read Full Circular Download PDF Given Below: