India: Guidance on tax withholding on transfers of virtual digital assets other than through an exchange

Rules for withholding tax at source for consideration paid for transfer of a virtual digital asset

Withholding tax at source for consideration paid for transfer of a virtual digital asset

The Central Board of Direct Taxes (CBDT) issued guidance regarding the rules for withholding (deducting) tax at source for consideration paid for the transfer of a virtual digital asset other than through an exchange.

The Finance Act, 2022 introduced a requirement for tax withholding at source on the amount of consideration paid for the transfer of a virtual digital asset. Accordingly, Section 194S was added to the Income-tax Act, 1961, requiring tax withholding at the rate of 1% on the consideration paid for transfer of a virtual digital asset, effective 1 July 2022.

The CBDT previously issued guidance for cases where the transfer of a virtual digital asset takes place on or through an exchange. Read TaxNewsFlash

Read a July 2022 report [PDF 234 KB] prepared by the KPMG member firm in India

 

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