WEEKLY TAX GYAN(w-04)

 1.    TDS Applicability on peer-to-peer VDA (Virtual Digital Assets) Transactions

Budget 2022, has brought VDAs within the ambit of tax. Income Tax at the rate of 30% is to be paid on gains on the transfer of VDAs. There is also a requirement to deduct TDS at the rate of 1% on payment towards VDAs w.e.f. 1^st July 2022. When the transaction is happening through the Exchange, the concerned exchange is required to deduct the TDS. When there is a peer-to-peer transaction, the buyer will have to discharge the TDS liability. In a peer-to-peer transaction, one VDA is transferred against another. Technically, both the party to a transaction are the buyer as well as the seller. Hence both are required to deduct TDS @ 1%.

 

2.    Cost Inflation Index for the Financial Year 2022-23

The Central Board of Direct Taxes vide notification no. 62/2022, dated 14-06-2022, fixed the Cost Inflation Index 331 for the Financial Year 2022-23.

 

3.    No TDS under section 194I on lease rent paid to International Financial Services Centre.

Lease rent or supplementary lease rents paid by any persons to a unit located in the International Financial services centre for the lease of an aircraft is not subject to TDS. The lessor is required to furnish a statement cum declaration to the lessee for the ten consecutive assessment years for which he opts to claim deduction u/s 80LA of the Income Tax Act. The lessee is required to furnish the details of payments made to the lessor in its quarterly TDS returns.

 

4.    Exemption from capital gains to NTPC Limited

The government in exercise of the powers conferred under section 47(viiaf) of the income tax act 1961, exempts the capital gains from the transfer of a capital asset from NTPC Limited to NTPC Green Energy Limited.

 

5.    Denial of the deduction under section 54 when the return of income is not filed.

The 6^th Proviso to section 139(1) is applicable from the assessment year 2020-21. As per the 6^th proviso to section 139(1) an assessee is required to file the return of income when total income exceeds the maximum amount not chargeable to tax without giving effect to the provisions of sections 10(38), 10A, 10B, 10BA, 54, 54B, 54D, 54EC, 54F, 54G, 54GA, 54GB or Chapter VI-A. The said 6^th proviso is applicable from AY 2020-21. The proviso does not have any retrospective effect.

ITAT Rajkot in Rajendrasinh Zala V/s. CIT. Date of Order 30^th Septemeber, 2021.

  

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CA Ramakrishna Sanjay