CBDT is constantly providing clarification in relation to TDS provision under section 194S of the act and trying to make new amendments also in the law.
To read the earlier clarification/ amendment in the provision of section 194S CLICK HERE: Order u/s 119 of the I.T. Act, 1961 in relation to TDS u/s 194S for transactions other than those taking place on or through an Exchange [Read circular] – Taxontips
Now CBDT has issued three notifications in relation to different clarification or updates under section 194S of the Income Tax Act which are as under:
TDS form for virtual digital asset exchange for deducting TDS (Notification No. 73/2022) Dt. 30.06.2022
CBDT has release Form 26QF which is a PAN based form where if the exchange is deducting TDS they need to provide details of the buyer/ broker.
“Provided that where the exchange has, in accordance with the guidelines issued under sub-section (6) of section 194S, agreed to pay tax in relation to a transaction of transfer of a virtual digital asset, owned by it as an alternative to tax required to be deducted by the buyer of such asset under section 194S, the Exchange shall deliver or cause to be delivered, a quarterly statement of such transactions in Form No. 26QF to the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) or the person authorised by the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems).
Explanation: For the purposes of this sub-rule,––
(i) “Exchange” means a person that operates an application or platform for transferring of virtual digital assets, which matches buy and sell trades and execute the same on their application or platform;
(ii) “virtual digital asset” shall have same meaning as assigned to it in clause (47A) of section 2.”
(ii) after sub-rule (4D), the following sub-rule shall be inserted, namely,––
“(4E) The exchange referred to sub-rule (1) shall, at the time of preparing of quarterly statement in Form No. 26QF, furnish particulars of account paid or credited on which tax was not deducted in accordance with guidelines issued under sub-section (6) of section 194S
To read Notification 1 CLICK HERE: Notification No. 73/2022 (incometaxindia.gov.in)
Reward points, mileage points, gift cards not considered as Virtual digital Asset: (Notification No. 74/2022) Dt. 30.06.2022
CBDT vide the above notification has clarified that following virtual digital assets which shall be excluded from the definition of virtual digital asset:
(i) Gift card or vouchers, being a record that may be used to obtain goods or services or a discount on goods
(ii) Mileage points, reward points or loyalty card, being a record given without direct monetary consideration under an award, reward, benefit, loyalty, incentive, rebate or promotional program that may be used or redeemed only to obtain goods or services or a discount on goods or services;
(iii) Subscription to websites or platforms or application.
To read Notification 2 CLICK HERE: Notification No. 74/2022 (incometaxindia.gov.in)
All Non-fungible token will not be considered as Virtual digital asset: (Notification No. 75/2022) Dt. 30.06.2022
CBDT has vide above notification specified a token which qualifies to be a virtual digital asset as non-fungible token within the meaning of sub-clause (a) of clause (47A) of section 2 of the Act but shall not include a non-fungible token whose transfer results in transfer of ownership of underlying tangible asset and the transfer of ownership of such underlying tangible asset is legally enforceable.
To read Notification 3 CLICK HERE: Notification No. 75/2022 (incometaxindia.gov.in)
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