The Central Board of Direct Taxes (CBDT) has issued a circular regarding the Tax Deduction at Source (TDS) on Virtual Digital Assets (VDA) transactions outside Exchange. Finance Act, 2022 inserted a new section 194S in the Act with effect from July 01, 2022. The new section mandates a person, who is responsible for paying to any resident any sum by way of consideration for transfer of a virtual digital asset (VDA), to deduct an amount equal to 1% of such sum as income tax thereon. The tax deduction is required to be made at the time of credit of such sum to the account of the resident or at the time of payment, whichever is earlier.
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