TDS SECTION-194S

Dear reader,

Today we will Talk about the Newly inserted section of TDS 194S under the income tax act 1961.

Let's see the overview:

The finance bill 2022 Introduced two different sections that are 194R and 194S in the income-Tax act, to be made effective from 1-July-2022.

Let's Move ahead toward's the topic.

In this section(194S), it is mandatory to deduction of tax at source @ 1% on the payment of purchase consideration to a resident person, on the transfer of a virtual digital asset, as defined in another new section 2(47A).

Further,

Two threshold limits for the amount of purchase consideration, have been prescribed, to be liable for deduction of TDS under this new section 194S. For ‘specified person’, i.e. an individual or HUF, whose total sales or gross receipts do not exceed rupees one crore, in case of business, or rupees fifty lakhs in case of the profession, during the immediately preceding financial year, or, an individual or HUF, who does not have any income under the head business or profession, TDS under this new section 194S is required to be deducted only, if the amount of purchase consideration for the purchase of the virtual digital asset, exceeds rupees fifty thousand, during the financial year.

In the case of a person other than such specified person, including firms, LLPs, and companies, TDS under this new section 194S is required to be deducted only, if the amount of purchase consideration for the purchase of a virtual digital asset, exceeds rupees ten thousand, during the financial year.

The Finance Bill 2022 has also proposed a new section 115BBH applicable w.e.f. 1.4.2022, mandating the tax liability of the income arising from the transfer of virtual digital assets at a flat rate of 30% plus applicable surcharge and cess, and Losses shall not be set off and carried forward.

Short-Introduction

​Section 194S

Tds on Payments for Digital virtual assets.

​Threshold "Specific Person" Payer-50,000 Other payer-10,000

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