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Virtual digital assets

  • IASbaba
  • June 24, 2022
  • 0
Science and Technology
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In News: Norms laid out for tax deduction onus

  • Issuing detailed guidelines on the TDS rule for virtual digital assets (VDAs) such as cryptocurrencies, the Central Board of Direct Taxes (CBDT) laid down the various scenarios on how the tax will be applicable and on whom will the onus to deduct it lie.
  • With introduction of Section 194S in the Income-tax Act through the Finance Act, 2022, a tax deducted at source (TDS) of 1 per cent will be levied on transfer of VDAs effective July 1 if the value of transactions exceeds Rs 10,000 in a year.
  • The CBDT has defined four primary VDAsbitcoin, ether, USD Tether and USD Coin — for the purpose of tax deduction on lesser known cryptocurrencies.
  • For example, in case of trade for Monero to Deso … the exchanges shall immediately execute a market order for converting this tax deducted in kind (1% Monero/1% Deso in the above example) to one of the primary VDAs (BT, ETH, USDT, USDC) which can be easily converted into INR

Significance

  • Revenue to the government
  • The responsibility to deduct TDS has been put on the exchanges which will increase the regulatory and compliance burden for them
  • The exchanges have to further disclose these transactions in their tax return and maintain a proper trail.
  • this would be helpful to the buyers and sellers both since they can enter into contracts with the exchange for passing the responsibility to deduct tax on their behalf in VDA to VDA transfers or otherwise as well.

Source: Indian Express

Previous Year Question

Q.1) With reference to ‘Bitcoins’, sometimes seen in the news, which of the following statement(s) is/are correct? (2016)

  1. Bitcoins are tracked by the Central Banks of the countries.
  2. Anyone with a Bitcoin address can send and receive Bitcoins from anyone else with a Bitcoin address.
  3. Online payments can be sent without either side knowing the identity of the other.

Select the correct answer using the codes given below.

  1. 1 and 2 only
  2. 2 and 3 only
  3. 3 only
  4. 1, 2 and 3

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