virtual digital assets tax Archives - Tax Heal

How to pay and file TDS online on virtual Digital Assets I Section 194S Income Tax

CA Satbir Singh — Mon, 27 Feb 2023 04:06:11 +0000

How to How to pay and file TDS online on virtual Digital Assets / virtual currency .

TDS on payment for transfer of virtual digital asset to a resident at the rate of 1% of such sum has been proposed in Finance Bill 2022. This is effective from 1st July 2022.

To make a TDS payment online, you need to visit https://www.protean-tinpan.com/ and under the ‘Services’ section click on ‘e-payment Pay Taxes Online’. Then under the TDS/TCS section click on the ‘CHALLAN NO./ITNS 281’ option

Therafter you have to Select

Tax Applicable* (Tax Deducted/Collected At Source From) Choose from Following

(0020) Company Deductees

(0021) Non-Company Deductees

Type of Payment : (200) TDS/TCS Payable by Taxpayer
Nature of Payment* : 94S Payment for Consideration for Transfer of Virtual Digital Assets
Choose Mode of Payment ( Net Banking or Debit Card)
Enter TAN number
Choose Assessment year
Enter Address
Fill up Captcha Code

How to file TDS online on virtual currency .

You need to file TDS return in Form 26QE . Utility can be downoaded from https://www.protean-tinpan.com/

Watch this video on TDS form 26QE and Form 16E for TDS on Virtual currency

How to issue TDS certificate for TDS deducted on Virtual Currency

You need to issue TDS certificate in Form 16E which can be downloaded from traces portal https://contents.tdscpc.gov.in/

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What is Virtual Digital Assets , Explained

CA Satbir Singh — Fri, 24 Feb 2023 14:45:00 +0000

What is virtual digital assets , Explained

Normally it is asked What is Virtual Digital Assets ?

As per Section 2(47) of Income tax Act , Virtual Digital Assets defination is as follow

(47A)

“virtual digital asset” means—

(a)		any information or code or number or token (not being Indian currency or foreign currency), generated through cryptographic means or otherwise, by whatever name called, providing a digital representation of value exchanged with or without consideration, with the promise or representation of having inherent value, or functions as a store of value or a unit of account including its use in any financial transaction or investment, but not limited to investment scheme; and can be transferred, stored or traded electronically;
(b)		a non-fungible token or any other token of similar nature, by whatever name called;
(c)		any other digital asset, as the Central Government may, by notification in the Official Gazette specify:
		Provided that the Central Government may, by notification in the Official Gazette, exclude any digital asset from the definition of virtual digital asset subject to such conditions as may be specified therein.

Explanation.—For the purposes of this clause,—

(a)		“non-fungible token” means such digital asset as the Central Government may, by notification in the Official Gazette, specify;
(b)		the expressions “currency”, “foreign currency” and “Indian currency” shall have the same meanings as respectively assigned to them in clauses (h), (m) and (q) of section 2^16b of the Foreign Exchange Management Act, 1999 (42 of 1999);]

Examples of Virtual Digital Assets

Cryptocurrencies: Bitcoin, Ethereum, Litecoin, and other cryptocurrencies are virtual digital assets that are stored and transferred electronically.
Non-Fungible Tokens (NFTs): These are unique digital assets that are used to represent ownership of digital art, music, videos, and other creative works.

Income Tax on Virtual Digital Assets

Virtual Digital Asset (VDA) covers crypto assets, Non-fungible tokens (NFTs), and any other digital asset, and it does not cover Indian currency, CBDCs, Foreign currency, and notified digital assets. The Finance Act, 2022 introduced a new’ flat rate’ scheme for the taxation of income arising from the transfer of Virtual Digital Assets (‘VDA’) with effect from the assessment year 2023-24.

Every transfer of virtual digital assets on or after 01-04-2022 shall be covered under this scheme.

TDS on Virtual Digital Assets

Further, Section 194S of Income Tax Act requires the deduction of tax from the payment of consideration on the transfer of VDA. Read Section 194S Income Tax for TDS on Payment on transfer of virtual digital asset.

Disclosure of Virtual Digital Assets in ITR

To bring the necessary changes to the new ITR Form, Schedule VDA has been added from AY 2023-24

The Schedule asks for details like the date of acquisition, date of transfer, head under which income is to be taxed, cost of acquisition in case of gift and consideration received.

Taxable income will be recorded in Schedule CG (Capital Gains) or Schedule BP (Business Income) based upon the classification of income under the head of capital gains or business income.

Gifts of Virtual Digital Assets

Gifts of Virtual Digital Assets will be taxable in the hand of Recipient.

for more info check here

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Section 194S Income Tax for TDS on Payment on transfer of virtual digital asset.

CA Satbir Singh — Fri, 01 Jul 2022 14:34:38 +0000

Section 194S Income Tax for TDS on Payment on transfer of virtual digital asset.

Section 194S Income Tax for TDS on Payment on transfer of virtual digital asset is Inserted by the Finance Act, 2022, w.e.f. 1-7-2022.

Summary of Section 194S Income Tax

Section 194S of the Income Tax Act of India deals with the deduction of tax at source on transactions related to the transfer of virtual digital assets.
According to the section, any person responsible for paying consideration to a resident in exchange for the transfer of a virtual digital asset must deduct an amount equal to one percent of the sum as income tax.
However, this provision does not apply to specified persons whose sales, gross receipts or turnover do not exceed a certain limit.
The section also provides for guidelines to be issued by the Board in case of any difficulty in implementing these provisions.
Circular no 14 of 2022 CBDT clarified TDS on virtual digital asset u/s 194S

Section 194S Income Tax

Payment on transfer of virtual digital asset.

194S. (1) Any person responsible for paying to any 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, deduct an amount equal to one per cent of such sum as income-tax thereon:

Provided that in a case where the consideration for transfer of virtual digital asset is—

(a)		wholly in kind or in exchange of another virtual digital asset, where there is no part in cash; or
(b)		partly in cash and partly in kind but the part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of such transfer,

the person responsible for paying such consideration shall, before releasing the consideration, ensure that tax required to be deducted has been paid in respect of such consideration for the transfer of virtual digital asset.

(2) The provisions of sections 203A and 206AB shall not apply to a specified person.

(3) Notwithstanding anything contained in sub-section (1), 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 fifty thousand rupees 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 ten thousand rupees during the financial year.

(4) Notwithstanding anything contained in section 194-O, in case of a transaction to which the provisions of the said section are also applicable along with the provisions of this section, then, tax shall be deducted under sub-section (1).

(5) Where any sum referred to in sub-section (1) is credited to any account, whether called “Suspense Account” or by any other name, in the books of account of the person liable to pay such sum, such credit of the sum shall be deemed to be the credit of such sum to the account of the payee and the provisions of this section shall apply accordingly.

(6) If any difficulty arises in giving effect to the provisions of this section, the Board may, with the prior approval of the Central Government, issue guidelines for the purposes of removing the difficulty.

(7) Every guideline issued by the Board under sub-section (6) shall be laid before each House of Parliament, and shall be binding on the income-tax authorities and on the person responsible for paying the consideration on transfer of such virtual digital asset.

Explanation.—For the purposes of this section “specified person” means a person,—

(a)		being an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business carried on by him or profession exercised by him does not exceed one crore rupees in case of business or fifty lakh rupees in case of profession, during the financial year immediately preceding the financial year in which such virtual digital asset is transferred;
(b)		being an individual or a Hindu undivided family, not having any income under the head “Profits and gains of business or profession”.]

How to deposit tds on virtual digital asset

Click here NEW TDS CHALLAN Form 26QE & 16E for TDS on VIRTUAL DIGITAL ASSETS I Income Tax I CA Satbir

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