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In a recent set of clarifications, the CBDT stated in line with part 194S of the I-T Act, the customer should deduct tax in a peer-to-peer transaction of digital digital belongings (VDA).
“Thus, in a peer-to-peer (i.e. purchaser to the vendor with out going by means of an Alternate) transaction, the customer (i.e. the particular person paying the consideration) is required to deduct tax beneath part 194S of the Act,” the CBDT stated.
With regard to legal responsibility to deduct tax at supply beneath part 194S of the Act when the consideration is in type or in trade of VDA, the CBDT stated on this state of affairs, the particular person chargeable for paying such consideration is required to make sure that the tax required to be deducted has been paid in respect of such consideration, earlier than releasing the consideration.
“Thus each must pay tax with respect to a switch of VDA and present the proof to others in order that VDAs can then be exchanged. This might then be required to be reported in TDS assertion together with challan quantity by each of them,” the CBDT stated.
