TDS on Crypto section 194S
This query is : Resolved
25 April 2025
Dear Sir.
We have purchased Some Bit coin tds deducted under Section 194S Please suggest how to pass the entry in books of accounts
Thank you
We have purchased Some Bit coin tds deducted under Section 194S Please suggest how to pass the entry in books of accounts
Thank you
12 August 2025
The full cost of acquisition is ₹1,00,000, not ₹99,000.
You must file TDS return in Form 26Q and issue a TDS certificate (Form 16A) to the seller.
If payment is in kind or partly in kind and cash, you must ensure TDS is paid before transfer of asset.
You must file TDS return in Form 26Q and issue a TDS certificate (Form 16A) to the seller.
If payment is in kind or partly in kind and cash, you must ensure TDS is paid before transfer of asset.
12 August 2025
Certainly! Here's how to **record the accounting entry** when you purchase cryptocurrency (e.g., Bitcoin) and deduct **TDS under Section 194S** of the Income Tax Act, 1961.
---
### 🧾 **Background – Section 194S:**
* Applicable from **1st July 2022**.
* Requires **TDS @ 1%** on the transfer of **Virtual Digital Assets (VDAs)** like Bitcoin.
* The **buyer** (you) must deduct TDS and deposit it with the government.
---
### 💼 **Accounting Entry in the Books of Buyer (You):**
Let’s say:
* Bitcoin purchased for ₹1,00,000
* TDS @1% = ₹1,000
* Net payment to seller = ₹99,000
---
#### 📘 **Journal Entry:**
```
Cryptocurrency (Bitcoin) A/c Dr. ₹1,00,000
To TDS Payable (Sec 194S) A/c ₹1,000
To Bank A/c ₹99,000
(Being Bitcoin purchased and TDS deducted under Sec 194S)
```
---
### 📝 **Subsequent Entry (When TDS is Deposited):**
```
TDS Payable (Sec 194S) A/c Dr. ₹1,000
To Bank A/c ₹1,000
(Being TDS deposited with government u/s 194S)
```
---
### ✅ **Key Notes:**
1. The full **cost of acquisition is ₹1,00,000**, not ₹99,000.
2. You must file **TDS return in Form 26Q** and issue a **TDS certificate (Form 16A)** to the seller.
3. If payment is in **kind or partly in kind and cash**, you must ensure TDS is paid **before** transfer of asset.
---
---
### 🧾 **Background – Section 194S:**
* Applicable from **1st July 2022**.
* Requires **TDS @ 1%** on the transfer of **Virtual Digital Assets (VDAs)** like Bitcoin.
* The **buyer** (you) must deduct TDS and deposit it with the government.
---
### 💼 **Accounting Entry in the Books of Buyer (You):**
Let’s say:
* Bitcoin purchased for ₹1,00,000
* TDS @1% = ₹1,000
* Net payment to seller = ₹99,000
---
#### 📘 **Journal Entry:**
```
Cryptocurrency (Bitcoin) A/c Dr. ₹1,00,000
To TDS Payable (Sec 194S) A/c ₹1,000
To Bank A/c ₹99,000
(Being Bitcoin purchased and TDS deducted under Sec 194S)
```
---
### 📝 **Subsequent Entry (When TDS is Deposited):**
```
TDS Payable (Sec 194S) A/c Dr. ₹1,000
To Bank A/c ₹1,000
(Being TDS deposited with government u/s 194S)
```
---
### ✅ **Key Notes:**
1. The full **cost of acquisition is ₹1,00,000**, not ₹99,000.
2. You must file **TDS return in Form 26Q** and issue a **TDS certificate (Form 16A)** to the seller.
3. If payment is in **kind or partly in kind and cash**, you must ensure TDS is paid **before** transfer of asset.
---
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