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Circular no. 14 of 2022 F. No. 370142/29/2022-TPL (Part 1) Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes (TPL Division) ***** New Delhi, dated 28th June, 2022 Subject: Order under section 119 of the Income-tax Act, 1961 (the Act) in relation to tax deduction at source under section 194S of the Act for transactions other than those taking place on or through an Exchange Finance Act, 2022 inserted a new section 194S in the Act with effe
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FAQ :
TDS under Section 194S mandates a 1% tax deduction on any sum paid as consideration for the transfer of a Virtual Digital Asset (VDA) to a resident, effective from 1st July 2022.
In peer-to-peer transactions (buyer to seller without an exchange), the buyer, who is the person paying the consideration, is responsible for deducting TDS under Section 194S.
Yes, TDS is not required if the consideration is paid by a 'specified person' and does not exceed ₹50,000 in a financial year, or if paid by any other person and does not exceed ₹10,000 in a financial year.
A 'specified person' is an individual or HUF with no income from 'profits and gains of business or profession', or one whose business turnover/gross receipts do not exceed ₹1 crore or professional receipts do not exceed ₹50 lakh in the preceding financial year.
If the consideration is in kind or partly in kind, the payer must ensure the TDS is paid before releasing the consideration. For VDA-for-VDA exchanges, both parties act as buyer and seller and must prove tax payment to each other.
No, if tax has already been deducted under Section 194S for a VDA transaction, tax deduction under Section 194Q is not required.
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