Understand Section 194S for TDS payment on the transfer of virtual digital assets like cryptocurrencies, NFTs, and DeFi. Learn about its provisions, applicability, and the filing of Form-26QE within the specified time limit. Stay informed to navigate tax regulations in the evolving digital asset landscape.
Now if one is trading in any of the following :cryptocurrencies, non-fungible tokens (NFTs), and decentralised finance all about 194S, you need to know.
Introduction to :
194S is introduced by the income tax authorities on 1st July,2022, about TDS to be deducted on transfer of virtual digital assets (VDA) such as cryptocurrencies, NFTs etc.
(1) Any person responsible for payment to a resident by way of consideration for the transfer of VDA has to deduct 1% TDS at the time of credit to the account or at the time of payment in any mode , whichever is earlier. Provided that in a case where the consideration for transfer of VDA is—
wholly in kind or in exchange of another VDA
OR
Partly in cash and kind but cash is not sufficient to meet the tax liability.
The person responsible for paying such consideration must ensure that the tax required to be paid is deducted
(2) 206AB (i.e., deducting a higher rate when making payments to those who haven’t filed their return last year) and 203A (i.e., every person deducting or collecting tax is required to obtain a TAN and quote the same while reporting to the IT department) are not applicable to specified person.
(3) No tax to be paid if consideration payable by a specified person doesn’t exceed 50,000/- in aggregate in a financial year or payable by someone other than specified person doesn’t exceed 10,000/- in aggregate during a financial year.
(4) For a transaction if both 194O & 194S are applicable follow 194S(1).
(5) Where sum payable is credited to suspense a/c or any other similar in the books of the person who needs to pay, such credit to be treated as if it was credited to the a/c of payee, and the provisions shall be applied accordingly.
(6) If there is any difficulty in applying the provisions to this section, board shall issue guide lines to remove the difficulty with prior approval of the central government.
(7) Every guideline shall be laid before parliament, and then shall be binding on the authorities as well as the person responsible for paying the consideration.
Who is a specified person for Section 194S?
a) Individual /HUF whose sales , gross receipts or turnover from business or profession doesn’t exceed 1cr in case of business or 50L in case of profession during financial year immediately preceding financial year in which the asset is formed ,
b) Individual /HUF not having any Profits and gains of business or profession (PGBP) income.
Whether consideration for transfer of VDA before 01-04-202 2 shall alsobe considered for calculation of threshold limit of 50,000/- or 10,000/- per financial year for specified person/ others respectively?
As such, for FY 2022-23, the consideration for transfer of VDA from 01-04-2022 to 3 0-06-2022 shall also be considered for calculating the value of 50,000/- or 10,000/-, as the case may be but TDS u/s 1 94S will not be deducted on such transaction. TDS u/s 194S will be deducted only on consideration for transfer of VDA credited or paid on or after 1.7.2022.
Time limit for filing Form-26QE:
Tax deducted must be reported on Form-26QE within 30 days from the end of the month in which tax has been deducted.
For example: Mr X has purchased VDA from Mr Y of Rs 60,000 on 10th May 2023. Mr X is required to deduct TDS @ 1% on 10th May 2023 and file form 26QE within 30 days from the end of May 2023 i.e., June 30 2023
Requirements for Form-26QE:
1. PAN and Name of buyer
2. PAN and Name of seller
3. Address of buyer and seller
4. Mobile no and email of buyer and seller
5. Total vaue of consideration of VDA
6. Date of transfer of VDA
7. Date of payment of consideration of VDA and date of TDS deduction
8. Whether payment made in kind or in exchange of another VDA
9. Your bank payment details to pay.
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