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TMI BlogOrder under section 119 of the Income-tax Act, 1961 (the Act) in relation to tax deduction at source under section 194S of the Act for transactions other than those taking place on or through an ExchangeX X X X Extracts X X X X X X X X Extracts X X X X ..... f Direct Taxes (TPL Division) ***** New Delhi, dated 28th June, 2022 Subject: Order under section 119 of the Income-tax Act, 1961 (the Act) in relation to tax deduction at source under section 194S of the Act for transactions other than those taking place on or through an Exchange Finance Act, 2022 inserted a new section 194S in the Act with effect from 1st July 2022. The new section mandates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar. The following are defined as "specified person" for the purposes of this provision: (i) An individual or Hindu undivided family (HUF) who does not have any income under the head "profit and gains of business or profession"; and (ii) An individual or HUF having income under the head "profits and gains of business or profession", whose total sales/gross receipts/turnover from business carri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e" has been defined to mean any person that operates an application or platform for transferring of VDAs, which matches buy and sell trades and executes the same on its application or platform. Same definition applies to this circular. For all other transactions (not covered by circular no 13/2022), this circular is being issued under section 119 for proper administration of the Act. 1) Liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er on or before the due date prescribed in the Income-tax Rules, 1962. For specified person Form 26QE has been introduced. It may be clarified that the TDS shall be on consideration for transfer of VDA less GST. 2) Liability to deduct tax at source under section 194S of the Act when the consideration is in kind or in exchange of VDA According to the proviso to sub-section (1) of section 194S of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence to other so that VDAs can then be exchanged. This would then be required to be reported in TDS statement along with challan number by both of them. This year Form 26Q has included provisions for reporting such transactions. For specified persons, Form 26QE has been introduced. 3. Interplay between provision of section 194S and section 194Q Without going into the merit whether VDA is goods ..... X X X X Extracts X X X X X X X X Extracts X X X X
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