Table of Contents
1. Who is required to deduct TDS as per Section 194S?
- As per Section 194S, TDS shall be deducted by every person responsible for paying any sum, to a resident, by way of consideration for the transfer of a virtual digital asset.
2. What is the rate at which tax is to be deducted under Section 194S?
- Tax is to be deducted at the rate of 1% of the consideration.
- If the payee does not furnish his/her PAN, tax has to be deducted at 20%
3. What is a Virtual Digital Asset?
- Virtual Digital Asset for the purpose of deduction of tax under this section means
- Any information, code, number or token which is generated through cryptographic means, also known as crypto currency. Eg. Bitcoin, ethereum etc.
- A Non-Fungible Token (NFT) or any other token of similar nature as notified by Govt.
- Any other digital asset, as notified by the Central Govt.
4. When should the tax be deducted under section 194S?
- Tax should be deducted at the time of credit of consideration to the account of the seller or at the time of payment whichever is earlier.
- If the consideration is wholly in kind or partly in cash and the part in cash is not sufficient to meet the TDS liability, the person responsible for paying such consideration should ensure that sufficient tax had been paid before the transfer of virtual digital asset.
5. What is the maximum amount upto which no tax needs to be deducted under this section?
- No tax needs to be deducted if the consideration payable by a specified person does not exceed Rs. 50,000 during the financial year.
- No tax needs to be deducted if the consideration payable by any person other than a specified person does not exceed Rs. 10,000 during the financial year.
6. Who is a specified person for the purpose of section 194S?
Specified person means
- A person being an individual/HUF whose turnover from business does not exceed Rs.1 crore or gross receipts from profession does not exceed Rs.50 lakhs during the immediately preceding financial year in which such virtual digital asset is transferred.
- A person being an individual or HUF who is not having any income under the head “Profits and gains of business or profession”.
7. Is the possession of a valid Tax deduction and collection account number (TAN) mandatory for deducting tax under this section?
- The provisions of section 203A (requirement to furnish TAN) and 206AB (Tax deduction at higher rates for non-filing of IT Return) will not be applicable to payments made by a specified person covered under this section.
- Therefore, TAN is not mandatory for deducting tax under section 194S.