In the Finance Act, 2022 the government Introduced TDS on VDA (Virtual Digital Assets) through section 194S.
This section is applicable from 1st July 2022. The section specified that a 1% TDS shall be deducted by any individual/HUF while buying any Virtual Digital Assets in a preceding year.
That mandates a person, who is responsible for paying to any resident any sum by way to consideration for transfer of a virtual digital asset (VDA), 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.
In the line the existing TDS section 194IA requiring deduction of tax at Source @ 1% on purchase of any immovable property exceeding rupees fifty Lakh in a preceding year.
There are two threshold limits has been prescribed for the amount of purchase consideration, has been prescribed, to be liable for deduction of TDS under this section 194S.
For ‘specified person’, i.e. an individual or HUF, whose total sales or gross receipts does not exceed rupees one crore, in case of business, or rupees fifty lakh in case of profession, during the immediately preceding financial year, or, an individual or HUF, Who does not have any income under the head business or profession, TDS under this section 194S is required to be deducted only, If the amount of purchase consideration for purchase of virtual digital asset, exceeds rupees fifty thousand, during the financial year.
In case of a person other than such specified person, including firms, LLPs and companies, TDS under the section 194S is required to be deducted only, if the amount of purchase consideration for purchase of virtual digital asset, exceeds rupees ten thousand, during the financial year.
In the Finance bill 2022 Govt. imposed a new section 115BBH which is applicable from 1st april 2022. In this section Govt. mandating the taxability of the income arisen from the transfer of VDA (Virtual Digital Assets) at a flat rate of @30% plus applicable surcharges and cess.
For Example:-
(a) Mr. Krishna trades in Crypto Currency (VDA) in Crypto exchange and he Purchase ethereum of Rs. 50,000, so Mr. Krishna is liable to deduct and pay @1% of tax at source while the time of payment.
(b) Mr. Krishna wants to buy NFT (Non Fundable Tokens) of Rs. 50,000 and Mr.Balram wants to sell ethereum of Rs. 50,000, they both have what each other needs.
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Author Bio
One doubt : Here in the Provision who has been considered as ‘Specified Person’ – 1) User or Buyer 2) Exchange 3) Broker ?