VDA & Crypto TDS Compliance — Section 194S

Regulatory Basis: The VDA/Crypto TDS Compliance service is grounded in Section 194S of the Income Tax Act, 1961, inserted by Finance Act 2022 and effective from 1 July 2022. This section mandates a Tax Deducted at Source (TDS) at 1% on the transfer of Virtual Digital Assets (VDA). As defined under Section 2(47A), 'Virtual Digital Asset' includes cryptocurrency, non-fungible tokens (NFTs), and any other digital asset notified by the Central Government. The responsibility to deduct TDS lies with the buyer or transferee of the VDA. Thresholds are specified: No TDS is required if (a) the consideration for VDA transfer is less than ₹50,000 in a financial year and the buyer is a specified person (individual or Hindu Undivided Family with business turnover less than ₹1 crore for business or less than ₹50 lakhs for profession); or (b) less than ₹10,000 for all other buyers. This ensures that small transactions are exempt, promoting ease of compliance for individuals. For reporting, Form 26QE is used as a Challan-cum-statement for TDS under Section 194S by specified persons (individuals/HUFs) to self-report VDA TDS. All other deductors, such as companies and firms, use Form 26QF. The due date for filing these forms is the 30th of the month following the month of deduction, as per Rule 30. Timely filing is crucial to avoid penalties under Section 234E or interest under Section 201. In exchange-based transactions, where VDA is transferred through a recognized exchange (e.g., Binance, WazirX, CoinDCX), the exchange deducts TDS and issues Form 16A to the transferee. For peer-to-peer (P2P) transactions, the buyer is responsible for deducting and remitting TDS directly to the government. This distinction is important for compliance, as P2P transactions require direct action from the buyer. Tax on VDA income is governed by Section 115BBH, which imposes a flat 30% tax on profits from VDA transfer, with no deduction allowed except for the cost of acquisition. Importantly, losses from VDA cannot be set off against other income, making accurate record-keeping essential. CBDT Circular No. 13/2022 provides clarifications on TDS deduction responsibilities, ensuring clarity on compliance procedures. This circular addresses common queries and reinforces the applicability of Section 194S. Our service encompasses all these aspects, offering end-to-end support for VDA TDS compliance. We assist in determining TDS liability, preparing and filing Form 26QE/26QF, ensuring threshold calculations are correct, and handling queries from the Income Tax Department. By leveraging our expertise, clients can avoid penalties, ensure timely compliance, and focus on their crypto investments without regulatory hassles.

This service ensures adherence to Section 194S of the Income Tax Act, 1961, mandating TDS at 1% on VDA transfers. We handle Form 26QE/26QF filings, threshold checks, and CBDT Circular 13/2022 compliance. Comprehensive support for cryptocurrency, NFTs, and other digital assets.