Dissecting TDS on VDA Transactions

Episode Duration:
60 minutes

Episode Background:
Taxation of Virtual Digital Assets was introduced by the Finance Act, 2022. With effect from 1 July, 2022, Section 194S of the Income-tax Act, 1961 (‘Act’) mandates an assessee to deduct tax at source on payment to any resident a consideration for transfer of a virtual digital asset. Since the introduction of this provision, there were a lot of doubts relating to compliance of this TDS provision, considering the magnitude of transactions carried out on crypto exchanges relating to sale and purchase of crypto currencies and other virtual digital assets.

The section, as introduced, was silent on certain crucial aspects such as who is the person responsible for paying (i.e. whether the Exchange or Broker or Buyer), who shall file TDS statements and issue TDS certificates, applicability on transactions carried out on foreign exchanges, implications on exchange of VDAs, multiple point of deduction of tax etc. In exercise of powers under Section 194S(6), CBDT has recently issued guidelines for removing difficulties in giving effect to the provisions, which address some of the issues existing in the minds of the Crypto community. However, there are still certain questions which remain unanswered or unresolved.

What shall the episode cover?
Against this backdrop, Taxsutra, along with its Knowledge Partner, Lakshmikumaran & Sridharan Attorneys (L&S), has organized an episode titled "Dissecting TDS on Transfer of Virtual Digital Assets". In this episode, Mr. L. Badri Narayanan, Executive Partner, L&S along with his team have deep-dived into the nuances of Section 194S of the Act and the guidelines issued by CBDT. 
 
Key Highlights

The episode has covered:

- The background on the introduction of Section 194S
- Guidelines issued by CBDT
- Practical issues in implementation of the Section