TDS on Virtual Digital Assets (Section 194S): Who Qualifies and What You Get
Learn how the tax deduction rules apply to your crypto transactions and what you need to do to stay compliant.
This rule requires a tax deduction when you buy virtual digital assets if the transaction amount goes above a certain limit.
Who it's for
This applies to anyone purchasing virtual digital assets when the total value of those transactions exceeds the specific thresholds set by the government.
What you get
Following this rule ensures you are in compliance with the mandate to deduct tax at a rate of 1% on transfers of virtual digital assets.
What it costs you
To comply, you must accurately track and provide the Permanent Account Number (PAN) of the person or entity you are buying the asset from.
The catch to know
Even if an exchange handles the deduction for you, you must personally verify that the tax has been correctly credited to your account by checking your Form 26AS.
How to apply
- Identify if your virtual digital asset purchase meets the required threshold.
- Collect the PAN details of the seller.
- Ensure the tax is deducted and reported during the transaction.
- Verify the deduction in your official tax credit statement.