Alert: What Can You Do About Introduction Of New Section 194S For Tax Deducted At Source Right Now | TaxAddicters | 2022

Howdy TaxAddicters,

                                                             The Income Tax Department(CBDT) released a notification regarding new section 194S for the purpose of TDS vide Circular no.13 of 2022 dated 22.06.2022. 

        Let us understand completely the new section 194S in an epic way of conversation between Krishna and Arjuna (Fictional Characters).

Arjuna(Fictional Character): Krishna, What is section 194S? When it will be applicable?

Krishna(Fictional Character): Arjuna, CBDT recently released a circular containing number 13 of 2022 dated 22.06.2022 introducing a new section 194S regarding Tax deduction at source. 

              As per sub-section (1) of section 194S, Any person is responsible for paying to any resident any sum by way of consideration for the transfer of virtual digital assets(VDA), It will be applicable from 1st July 2022.

Arjuna(Fictional Character): Krishna, When will the Responsible person be liable to deduct tax, and at what rate? Whether it will be dependent on the mode of payment of Consideration? 

Krishna(Fictional Character): Arjuna, Tax shall be deducted at the time of credit of such sum to the account of the resident or at the time of payment of such sum by any mode, whichever is earlier, deduct an amount equal to 1% of such sum as income-tax thereon:

Provided that in a case where the consideration for transfer of the virtual digital asset is—

 (a) wholly in kind or in exchange of another virtual digital asset, where there is no part in cash; or

 (b) partly in cash and partly in kind but the part in cash is not sufficient to meet the liability of deduction of tax in respect of the whole of such transfer,

the person responsible for paying such consideration shall, before releasing the consideration, ensure that the tax required to be deducted has been paid in respect of such consideration for the transfer of virtual digital assets.

Arjuna(Fictional Character): Krishna, Who will be considered as responsible person for section 194S?

Krishna(Fictional Character): Arjuna, here, responsible person means Specified Person as per the Circular.

Explanation.—For the purposes of this section "specified person" means a person,—

 (a) being an individual or a HUF, whose total sales, gross receipts, or turnover from the business carried on by him or profession exercised by him does not exceed Rs.1 crore in case of business or Rs.50 lakh in case of the profession, during the financial year immediately preceding the financial year in which such virtual digital asset is transferred;

 (b) being an individual or a HUF, not having any income under the head "Profits and gains of business or profession".

Arjuna(Fictional Character): Krishna, are there any exceptional cases for this section 194S?

Krishna(Fictional Character): Yes Arjuna, in the Income Tax Act, every section describes its applicability, pros, cons, and exceptional cases too as well as Section 194S also contains some exceptional cases of:

As per section 194S(3), Notwithstanding anything contained in sub-section (1), no tax shall be deducted in a case, where—

 (a) the consideration is payable by a specified person and the value or aggregate value of such consideration does not exceed Rs.50,000 during the financial year; or

 (b) the consideration is payable by any person other than a specified person and the value or aggregate value of such consideration does not exceed Rs.10,000 during the financial year.

 

 Arjuna(Fictional Character): Krishna, tell me any other important points about section 194S!

Krishna(Fictional Character): Arjuna, there are other points which are needed to be known about them, they are:

• As per As per sub-Section (4) of Section 194S, Notwithstanding anything contained in section 194-O, in case of a transaction to which the provisions of the said section are also applicable along with the provisions of this section, then, tax shall be deducted under sub-section (1).

• As per sub-Section (5) of Section 194S, Where any sum referred to in sub-section (1) is credited to any account, whether called "Suspense Account" or by any other name, in the books of account of the person liable to pay such sum, such credit of the sum shall be deemed to be the credit of such sum to the account of the payee and the provisions of this section shall apply accordingly.

• As per sub-Section (6) of Section 194S, If any difficulty arises in giving effect to the provisions of this section, the Board may, with the prior approval of the Central Government, issue guidelines to remove the difficulty.

• As per sub-Section (7) of Section 194S, Every guideline issued by the Board under sub-section (6) shall be laid before each House of Parliament and shall be binding on the income-tax authorities and on the person responsible for paying the consideration on transfer of such virtual digital asset.

• The provisions of sections 203A and 206AB shall not apply to a specified person.

with this, see in the next post !!!

Credits:

Source: Income Tax India

Fictional Characters: CA Umesh Sharma

Also, read other popular articles:

1. Income Tax rates for certain manufacturing companies as per  Section 115BA of Income Tax Act,1961.

2. A Complete summary(incl. Accounting treatment) of Corporate Social responsibility(CSR) expenditure as per the Companies Act, 2013.

3. Penalties as per Income Tax Act, 1961.

4. What is QRMP Scheme under GST Act, 2017.

5. Appointment of Directors under the Companies Act,2013.

 

Sharing is Caring!