The rules regarding the tax deducted at source (TDS) on virtual digital assets (VDAs) and cryptocurrencies for transactions of more than Rs 10,000 have come into effect from Friday (July 1).
The move comes after the imposition of 30 percent flat income tax on cryptocurrencies from 1st April 2022.
Finance Minister Nirmala Sitharaman, during the Union Budget 2022-23 in Parliament on February 1 introduced a 1 percent tax deducted at source (TDS) on the transfer of the virtual digital assets (VDAs) — or simply put crypto and Non Fungible Tokens (NFTs).
New directions on TDS on crypto
The Central Board of Direct Taxes (CBDT) has issued detailed guidelines on the levy TDS on crypto assets.
As per the new guidelines, the buyer of a VDA is required to deduct 1 percent of the amount paid to the seller (an Indian resident) as TDS. The tax is required to be deducted at the time of credit of the amount or at the time of payment to the resident individual, whichever is earlier. The tax will be deducted only if the amount paid exceeds the specified limit, CBDT said.
Where is the deduction not required
According to the CBDT circular, the deduction is not required in cases where:
First Published: IST