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UPSC CURRENT AFFAIRS | TDS ON TRANSFER OF VIRTUAL DIGITAL ASSETS | 27TH JUNE | INDIAN EXPRESS

/ June, 2022, UPSC Daily Current Affairs

TDS ON TRANSFER OF VIRTUAL DIGITAL ASSETS

The Central Board of Direct Taxes (CBDT) has issued a detailed guidelines on the tax deducted at source (TDS) rule for virtual digital assets (VDAs) such as cryptocurrencies,

And laid down the various scenarios under which tax would be applicable and on whom the onus of deduction would lie.

MORE DETAILS:

  • The Finance Act, 2022 introduced Section 194S in The Income Tax Act, 1961,
  • Under which a TDS of 1 per cent will be levied on the transfer of VDAs effective July 1 if the value of transactions exceeds Rs 10,000 in a year.
  • The Tax Department has defined the responsibilities of deducting the tax in various scenarios.
  • In cases where the transfer of VDA takes place on or through an exchange,
  • And the VDA being transfer is not own by the exchange,
  • The tax may be deducts by the exchange making the payment to the seller.
  • However, when the payment between the seller and the exchange is being done through a broker,
  • The responsibility to deduct tax shall be on both the exchange and the broker.
  • In cases where transfer of VDA takes place on or through an exchange, and the VDA being transfer is own by this exchange,
  • The primary responsibility to deduct tax remains with the buyer or his broker.
  • The CBDT has defined four primary VDAs — bitcoin, ether, USD Tether, and USD Coin — for the purpose of tax deduction on lesser-known cryptocurrencies.

SOURCE: INDIAN EXPRESS