Virtual digital assets: Norms laid out for tax deduction onus

Issuing detailed guidelines on the TDS rule for virtual digital assets (VDAs) such as cryptocurrencies, the Central Board of Direct Taxes (CBDT) on Wednesday laid down the various scenarios on how the tax will be applicable and on whom will the onus to deduct it lie.

With introduction of Section 194S in the Income-tax Act through the Finance Act, 2022, a tax deducted at source (TDS) of 1 per cent will be levied on transfer of VDAs effective July 1 if the value of transactions exceeds Rs 10,000 in a year.

The CBDT has, in the guidelines, defined the responsibilities of deducting the tax in various cases. For example, in case the transfer of VDA takes place on or through an exchange, and the VDA being transferred is not owned by the exchange,