Provisions of TDS under the new section 194S (Payment on the transfer of a virtual digital asset) proposed in the Union Budget 2022-23.
Any person responsible for paying to a resident “any sum” by way of consideration for transfer of a virtual digital asset, shall, at the time of credit of such sum to the account of the resident or at the time of payment of such sum by any mode, whichever is earlier,
Important Point: The word used in the section is “Any Sum”, therefore, TDS shall be deducted on the amount of transfer of Virtual Digital Asset (VDA) and not on the profit earned.
The applicable rate of TDS:
TDS shall be deductible @ 1% of such sum.
Threshold Limit:
No tax shall be deducted in a case, where––
(a) the consideration is payable by a “specified person” and the value or aggregate value of such consideration does not exceed Rs. 50,000/- during the financial year; or
(b) the consideration is payable by any person “other than a specified person” and the value or aggregate value of such consideration does not exceed Rs. 10,000/- during the financial year.
Meaning of “specified person”–– Individual or a Hindu undivided family
(a) Not having any income under the head “Profits and gains of business or profession”.
OR
(b) whose total sales, gross receipts or turnover:
Business: Does not exceed Rs. 1 Crore
Profession: Does not exceed Rs. 50 lakh,
during the financial year immediately preceding the financial year in which such virtual digital asset is transferred;
Important Point: The provisions of sections 203A (Tax deduction and collection account number) and 206AB (Special provision for deduction of tax at source for non-filers of income-tax return) shall not apply to a specified person.
Prevailing Section:
- A transaction in respect of which tax has been deducted under this section shall not be liable to deduction or collection of tax at source under any other provisions of this Chapter.
- Section 194-O v/s Section 194S: In case of a transaction to which the provisions of the section 194-O are also applicable along with the provisions of the section 194S , then, tax shall be deducted under section 194S.
Also Read: Union Budget 2022 amendments proposed in the Income Tax
Memorandum Explaining the Provisions in the Financial Bill
Read More on Budget 2022
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