Crypto Tax: TDS will have to be paid to the buyer or to the crypto exchange from July 1 in the transaction of cryptocurrency? listen to cbdt


New Delhi. The Central Board of Direct Taxes (CBDT) on Tuesday issued a clarification on transactions in cryptocurrencies. The Income Tax Department on Tuesday said that both buyer and seller will have to deduct TDS (tax deducted at source) from their level in exchange of digital asset (VDA) or cryptocurrencies. The CBDT said that as per section 194S of the Income Tax Act, the buyer has to deduct tax in the transaction of VDA.

CBDT, the controlling body of the Income Tax Department, said, “As such, in digital asset transactions conducted off-exchange, the buyer is required to deduct tax under section 194S of the Income Tax Act.” The CBDT said that the person responsible for such liability shall ensure that the tax deducted has been paid.

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How to pay TDS

The CBDT, trying to explain this through an example, said that if ‘A’ VDA is being given in lieu of ‘B’ VDA, then in this situation both the parties are the buyer as well as the seller. In this context, both the parties will have to pay tax in respect of VDA transactions, the CBDT said. The other party will have to give evidence of this so that the two VDAs can be swapped. Then both the parties will have to mention the same along with the challan number in the TDS statement.

relief for buyers

Sandeep Jhunjhunwala, Partner, Nangia Andersen LLP said that the CBDT has arranged for the buyer to ensure that the seller has paid the appropriate taxes before issuing the return. He said that this arrangement has come as a relief to the buyers. Otherwise, the buyers would have to bear the cost of TDS on their own and there would be no scope for recovery from the seller.

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TDS will be charged from July 1

The CBDT had last week said that the onus of deducting one per cent TDS in VDA transactions through exchanges would be primarily on the exchanges. The imposition of TDS on cryptocurrencies or VDAs was announced in the budget for the financial year 2022-23. This provision is going to be effective from July 1.

30 percent income tax also

This year’s budget has brought clarity regarding the imposition of income tax on crypto assets. From April 1, such transactions attract 30 percent income tax in addition to cess and surcharge. It was also proposed to levy one percent TDS on payment of more than Rs 10,000 in digital currency. This will come into effect from July 1. The limit for TDS for prescribed individuals is Rs 50,000 per annum. This includes individuals/Hindu Undivided Families. They will need to get their accounts audited under the Income Tax Act.

Tags: CBDT, Crypto, Cryptocurrency, TDS


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