Crypto transactions to attract 1 per cent TDS from 1 July: What you need to know

The Income Tax Department has announced that cryptocurrency transactions will attract tax deducted at source (TDS) of 1 per cent from 1 July. As per Moneycontrol, this will apply to all virtual digital asset (VDA) transfers – cryptocurrencies, non-fungible tokens (NFTs), and so on – worth over Rs 10,000. Here’s what you need to know: Under what Section has this been introduced? The rules are part of the newly added section 194S of the Income Tax Act, which was announced with the Union Budget 2022-23 in February (which also noted a 30 per cent tax on any income from the transfer of crypto assets or any virtual digital asset). From when will it apply? TDS deduction shall be counted from 1 April, 2022. It will apply when the value or aggregate value of the consideration for transfer of VDA exceeds Rs 50,000 during the financial year in the case of consideration being paid by a specified person (buyer), and Rs 10,000 in other cases, as per The Quint. What is a specified person? An individual or Hindu Undivided Family (HUF) who does not have any income under the head ‘profit and gains from business and profession’ or one whose total sales/gross receipts/turnover from business does not exceed Rs 1 crore or, in case of profession, does not exceed Rs 50 lakh, as per The Quint. What is a VDA? As per Moneycontrol, the rules define VDA as any information, code, number or token (not being Indian currency or any foreign currency) that is generated through cryptographic or other means. “(…the VDA provides) digital representation of value which is 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 and includes its use in any financial transaction or investment, but not limited to, investment schemes and can be transferred, stored or traded electronically.” NFTs and other tokens of similar nature are included in this definition. What about gains? “Any income arising from the transfer of virtual digital assets will be taxable at the rate of 30 per cent with no setoffs allowed as deductions except the cost of acquisition, being the only allowable deduction,” Deepak Jain, chief executive, TaxManager.in, told Moneycontrol. On 1 February, finance minister Nirmala Sitharaman during her Budget 2022-23 speech had announced a taxation scheme on virtual digital assets such as cryptocurrencies. Sitharaman had announced that any income from the transfer of any virtual digital asset shall be taxed at the rate of 30 per cent. Sitharaman further added that while computing such income, no deduction with respect to expenditure or allowance shall be incurred, barring the cost of acquisition. She also said the loss from the transfer of cryptos or any digital asset cannot be set off against any other income. In addition, a TDS of 1 per cent would be made on the transfer of digital assets, she had said. With inputs from agencies Read all the  Latest News ,  Trending News ,  Cricket News ,  Bollywood News ,  India News  and  Entertainment News  here. Follow us on  Facebook,  Twitter and  Instagram.