The Central Board of Taxes (CBDT) has issued Notification No. 73/2022 dated 30.06.2022 in G.S.R. 482(E) through Income-tax (20th Amendment) Rules, 2022 to amend Rule 31A of the Income Tax Rules, 1962 (‘Rules’) to allow Exchanges to furnish quarterly statement of TDS in Form 26QF where it has agreed to pay tax in relation to a transaction of transfer of a Virtual Digital Asset (VDA), owned by it as an alternative to the tax required to be deducted by the buyer of such asset under section 194S of the Income-tax Act, 1961 (‘Act’) in accordance with the guidelines issued under sub-section (6) of section 194S.
In other words, CBDT has notified Form 26QF which is required to be filed by all virtual digital asset exchanges under Sec 194S.
For this purpose, a Proviso is inserted in sub-rule (1) of Rule 31A of the Rules. Rule 31A prescribes for furnishing of statement of deduction of tax under sub-section (3) of section 200 of the Act to the Director-General of Income-tax (Systems) or the person authorised by the Director-General of Income-tax (Systems).
Earlier, on 21.06.2022 vide Notification No. 67/2022 through Income-tax (19th Amendment) Rules, 2022 the Board has notified furnishing of challan-cum-statement in Form No. 26QE in case of TDS on Virtual Digital Assets or crypto-currency under section 194S by the buyer of the VDAs.
The guidelines for removing difficulties for deduction of tax (TDS) on virtual digital assets (VDAs) as per the provision of section 194S(6) were issued vide Circular No. 13/2022 dated 22.06.2022 and again further guidelines were issued on 28.06.2022 vide Circular No. 14/2022.
Question 1(ii) of Circular No. 13/2022 in order to remove difficulty clarifies that as an alternative the Exchange may enter into a written agreement with the buyer or his broker that in regard to all such transactions the Exchange would be paying the tax on or before the due date for that quarter. The Exchange would be required to furnish a quarterly statement (in Form No. 26QF) for all such transactions of the quarter on or before the due date prescribed in the Rules.
Though the circular prescribes for furnishing of statement of TDS in Form 26QF by the Exchanges in respect of TDS on VDAs by the Exchanges on behalf of the buyers, no such Form 26QF was notified by the Board in this regard till date.
With this 20th Amendment Rules of 2022, the Board has now notified the quarterly statement of TDS in Form 26QF required to be furnished by the Exchanges where it has agreed to pay tax in relation to a transaction of transfer of a Virtual Digital Asset (VDA), owned by it as an alternative to the tax required to be deducted by the buyer of such asset under section 194S of the Act in accordance with the guidelines issued under sub-section (6) of section 194S as discussed above.
As per rule 31A(2), the due date to furnish statements referred to in sub-rule (1) shall be as follows-
Since rules for furnishing of Form 26QF is placed in sub-rule (1), the same shall be required to be furnished by the Exchanges as per due dates mentioned above.
Further, as per the newly inserted sub-rule (4E) of Rule 31A, the Exchange is also required to furnish particulars of account paid or credited on which tax was not deducted in accordance with guidelines issued under sub-section (6) of section 194S of the Act.
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Read the full text of CBDT Notification No. 73/2022 dated 30.06.2022 on Notifying Form No. 26QF
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 30th June, 2022
INCOME-TAX
G.S.R. 482(E).—In exercise of the powers conferred by section 295 read with section 194S of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes, hereby, makes the following rules further to amend the Income-tax Rules, 1962, namely:-
1. Short title and commencement.– (1) These rules may be called the Income-tax (20th Amendment) Rules, 2022.
(2) They shall come into force from 1 st day of July, 2022.
2. In the Income-tax Rules, 1962 (hereinafter referred to as the principal rules), in rule 31A, –
(i) after sub-rule (1), the following shall be inserted, namely:-
“Provided that where the exchange has, in accordance with the guidelines issued under sub-section (6) of section 194S, agreed to pay tax in relation to a transaction of transfer of a virtual digital asset, owned by it as an alternative to tax required to be deducted by the buyer of such asset under section 194S, the Exchange shall deliver or cause to be delivered, a quarterly statement of such transactions in Form No. 26QF to the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) or the person authorised by the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems).
Explanation: For the purposes of this sub-rule,––
(i) “Exchange” means a person that operates an application or platform for transferring of virtual digital assets, which matches buy and sell trades and execute the same on their application or platform;
(ii) “virtual digital asset” shall have same meaning as assigned to it in clause (47A) of section 2.”
(ii) after sub-rule (4D), the following sub-rule shall be inserted, namely,––
“(4E) The exchange referred to sub-rule (1) shall, at the time of preparing of quarterly statement in Form No. 26QF, furnish particulars of account paid or credited on which tax was not deducted in accordance with guidelines issued under sub-section (6) of section 194S. ” .
[As corrected by Corrigendum Notification No. 77/2022 dated 01.07.2022]
“(4E) The Exchange referred to in sub-rule (1) shall, at the time of preparing the quarterly statement in Form No. 26QF, furnish particulars of amount paid or credited on which tax was not deducted in accordance”
3. In the principal rules, in Appendix II, after Form No. 26QE, the following Form shall be inserted, namely:–
“Form No. 26QF
Quarterly statement of tax deposited in relation to transfer of virtual digital asset under section 194S to be furnished by an exchange for the quarter ending ………. June/ September/ December/ March
[section 194S, rule 31A(1) and (4E)]
……..
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