Both buyer and seller will have to withhold taxes for transactions involving an exchange of one virtual asset for another, the Central Board of Direct Taxes said Tuesday.
In a fresh set of clarifications, the CBDT said according to section 194S of the I-T Act, the buyer will have to deduct tax in a peer-to-peer transaction of virtual digital assets (VDA).
"Thus, in a peer-to-peer (i.e. buyer to the seller without going through an Exchange) transaction, the buyer (i.e. the person paying the consideration) is required to deduct tax under section 194S of the Act," the CBDT said.
With regard to liability to deduct tax at source under section 194S of the Act when the consideration is in kind or in exchange of VDA, the CBDT said in this situation, the person responsible for paying such consideration is required to ensure that the tax required to be deducted has been paid in respect of such consideration, before releasing the consideration.
"Thus both need to pay tax with respect to a transfer of VDA and show the evidence to others 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," the CBDT said.
Source Name:-Economic Times