New Delhi: The new rules for Tax Deduction at Source (TDS) on Virtual Digital Assets (VDA) and cryptocurrencies for transactions above Rs 10,000 came into effect from today (July 1). With the implementation of the new rules, investors will now have to face 1 per cent TDS on transfer of VDAs above Rs 10,000. The Finance Act 2022 enacted two TDS amendments relating to profits/perquisites and virtual digital assets (VDA) by inserting sections 194R and 194S in the Income Tax Act, 1961 (‘the Act’). Both the rules became effective from July 1, 2022.
Till now, there was no clarification on whether gift cards and mileage points would be classified as VDA. And whether TDS will be levied on them or not. However, the Central Board of Direct Taxes (CBDT) has now come up with a clarification. (Also Read: Center Raises Import Duty On Gold! Yellow Metal Price Rise, Will Rupee Recover?)
In a notification issued late Thursday (June 30), CDBT said that gift cards, mileage points, reward points and loyalty cards will not come under the definition of VDA. The notice will ensure that buyers or sellers of such goods will not have to pay TDS as applicable on VDA transactions. (Also Read: Tablecloths For Rs 30,600: Netizens Slam Priyanka Chopra’s Homeware Brand)
According to the official notification, VDA includes cryptocurrencies and non-fungible tokens (NFTs). TDS on transactions of such properties was introduced in the budget for 2022-23.
The CBDT said the rebate shall include gift cards or vouchers that can be used for discounts on goods or services, mileage points, reward points or loyalty cards issued as part of rewards, and any reward, benefit, loyalty on goods or services. can be done to achieve. An incentive, discount, or promotional program that can be used or redeemed to obtain goods or services at a discount to the goods.