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TDS Form 26QE for Crypto

The Tax Deducted at Source (or TDS) is a taxation mechanism that ensures that taxes are collected from the source of income. It’s a form of advance tax that is deducted by the payer at the time of making payments such as salaries, rent, or professional fees. 

After the introduction of the 2022 budget in India, crypto holders were introduced to a One Percent TDS and 30 Percent Tax on all their Crypto Gains.

Tax deducted on VDA (Virtual Digital Assets), also popularly called Crypto to be deposited in challan-cum-statement in Form 26QE.

A new sub-rule (2D) has been inserted in Rule 30 which provides for payment of tax deducted at source (TDS) under section 194S.

Section 194S provides that any person, responsible for paying to a resident any sum by way of consideration for the transfer of a virtual digital asset (VDA), shall deduct tax at the rate of 1% of such sum.

Sub-rule (2D) provides that tax deducted under section 194S shall be paid to credit of the Central Government within 30 days from the end of the month in which the deduction is made. Such payment shall be made by a challan-cum-statement in Form 26QE electronically.

TDS Form 26QE is a statement cum challan that is used to deposit tax deducted at source (TDS). This form is required to be filed by the person responsible for deduction of tax under section 194S and shall furnish the certificate of deduction of tax at source in Form 16E to the payee within 15 days from the due date for furnishing the challan-cum-statement in Form 26QE.

The due date for filing Form 26QE is 30 days from the end of the month in which tax is deducted. For example, if tax is deducted on rent paid in the month of January, Form 26QE must be filed by 28th February.

Certificate of tax deducted at source on VDA or Crypto or Cryptocurrency to be issued in Form 16E

A new sub-rule (3D) has been inserted in Rule 31 which provides for furnishing of certificate of deduction of tax at source under section 194S.

A person responsible for deduction of tax under section 194S shall furnish the certificate of deduction of tax at source in Form 16E to the payee within 15 days from the due date for furnishing the challan-cum-statement in Form 26QE.

 
 
Separate reporting of tax payments made in accordance with Provisos to Sections 194B, 194R and 194S

Proviso to section 194B provides that if winnings in Lottery or Crossword Puzzles are partly in cash and partly in kind and the cash part isn’t sufficient to pay the applicable taxes, the person responsible for paying such winning shall release the winning only after payment of applicable taxes to the credit of Central Government.

Similar provisions are incorporated in the provisions of section 194R(1) and section 194S(1).

The Board has amended the Annexure to Form 26Q which seeks deductee/payee wise break up of TDS. In case wherein the proviso of Section 194B, 194R and 194S are applicable, the annexure seeks the following additional details from the deductor:

  • Amount of tax deposited;
  • BSR Code of bank;
  • Date of payment; and
  • Challan serial number.

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