Finance Minister Nirmala Sitharaman announced 1% TDS To Be Charged On Cryptocurrency Transactions From July 1

A TDS deduction on all virtual digital asset transactions of 1 % was announced in Union Budget 2022 - 2023 by Finance Minister Nirmala Sitharaman

Finance Minister Nirmala Sitharaman announced 1% TDS To Be Charged On Cryptocurrency Transactions From July 1

After announcing a 30 % tax on crypto payments in India 2022 - 2023 in Union Budget. Cryptocurrency transactions are set to attract extra tax deducted at a source of 1 % starting from 1 July 2022

The TDS deduction will apply to all virtual digital asset transfers including cryptocurrencies and NFT over 10,000 INR in the newly introduced clause 47 A of the Income Tax Act.

VDA is defined as any information code, number, or token except Indian or any other foreign currency that is generated through cryptographic or other means NFT or any other related token are included in this act.

Furthermore, ambiguity over the rates arose after the income tax department website mentioned that the rate for virtual digital assets has been brought down to 0.1% from the 1 % TDS on crypto assets

The Central Board of Direct Taxes (CBDT) announced that the onus of holding the TDS lies with the person making the payment to the seller. This implies that the TDS needs to be deducted from the selling price and after deducting the TDS amount and the test can be paid or transferred to the seller.

Transaction between seller and buyer without the involvement of crypto exchanges or broker, the buying party need to pay tax under Section 194s of the IT Act 

For the transfer of VDA in exchange for kind, the buyer will be required to release the consideration in kind after the seller provides proof of payment of tax for VDA for VDA transactions for the buyer and the seller need to pay tax concerning the transfer of VDA and show the proof to each other so that VDA's can be exchanged The transaction will then have to be reported in the TDS statement along with the challan number by filling up Form 26Q 

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