The Ministry of Finance has mandated tax deducted at source (TDS) at the rate of 1 percent on Virtual Digital Assets (VDA) including Cryptocurrencies.
Accordingly, Finance Act 2022 has inserted a new section 194S in the Income-tax Act, 1961 (hereinafter referred to as “the Act”) with effect from 1st July 2022. Further, it has issued Guidelines for removal of difficulties under sub-section (6) of section 194S.
As earlier, government had informed in Union Budget 22-23 regarding imposing 1% tax deducted at source (TDS) on Virtual Digital Assets (VDA) including Cryptocurrencies. While, the cryptocurrency industry urged Central Government to reconsider the budget proposal to impose a 1 percent TDS on VDA transactions. They said that it will be difficult to comply with.