Quick Summary
The Income-tax Act, 2025, as amended by the Finance Act, 2026, contains specific provisions for tax deducted at source (TDS) on payments made for the transfer of Virtual Digital Assets (VDAs). Under Section 393(1) [Table S. No. 8(vi)], TDS is required at1% of the consideration when a resident receives payment for transferring a VDA. The Income Tax Department has also clarified how the TDS responsibility works in different situations, including direct transactions, exchange-based trades, broker-
Daily Limit Reached
You have reached your daily limit of 2 Free News
Subscribe to CCI PRO for unlimited access
Why Upgrade to CCI PRO?
- No Ads
- WhatsApp Community
- Daily E-Newsletter
- Unlimited News Access
- Profile Visitors
- Link Social Profiles
- Featured Job Posts
- Pro Badge
- Expert GST Guidance
- Unlimited Forum Replies
- Download Content in PDF
1 Year PLAN - Rs.1999
1799
(Excl. of GST ₹323)
2 Years PLAN - Rs.3499
3149
(Excl. of GST ₹566)
BEST VALUE
3 Years PLAN - Rs.4999
4499
(Excl. of GST ₹809)
View all CCI PRO benefits
Already a PRO member? Login here for an ad-free experience. 07941056694
FAQ :
The TDS rate on Virtual Digital Assets is 1% of the consideration for the transfer. This rate is not subject to surcharge or Health & Education Cess. However, if the deductee doesn't provide their PAN, TDS will be deducted at 20%.
For certain individuals and HUFs, the threshold is ₹50,000 per tax year. For all other persons, the threshold is ₹10,000 per tax year. TDS is not required if the aggregate consideration doesn't exceed these limits.
Generally, the person making the payment to a resident for a VDA transfer deducts TDS. This can be the buyer in an OTC deal, the exchange in exchange-based trades, or potentially a broker, depending on the specific transaction structure and agreements.
TDS must be deducted at the earlier of the time of payment by any mode, or the time when the amount is credited to the resident's account. For intra-day crypto trading, tax is deducted each time a transaction is squared off.
If the consideration is entirely in kind, or partly in cash but insufficient for TDS, the payer must ensure the tax is paid before releasing the consideration. The payer can rely on the seller's declaration and advance tax payment proof if applicable.
Failure to deduct or deposit TDS can lead to being treated as an assessee-in-default, incurring interest charges. Penalties and prosecution may also apply. Failing to file TDS statements or issue certificates can result in further fees and penalties.
CAclubindia
