Section 194S in the Indian Income Tax Act, 1961, regulates the deduction of tax at source (TDS) for the transfer of virtual digital assets (VDAs). Effective from July 1st, 2022, if the total value of a VDA transfer exceeds INR 10,000 (or INR 50,000 for specified persons) in a year, a 1% TDS will be deducted. Additionally, a new rule under Section 115BBH imposes a 30% tax on cryptocurrency, NFT, and VDA transactions. Participants in these transactions cannot claim deductions for expenses or losses and are ineligible for Chapter VI-A deductions.
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