Govt to clarify virtual digital asset tax this week; employers may have to pay 30% tax on VDAs they offer to staff

Citing people familiar with the matter, ET reported that the tax will be levied on the difference between the cost of the acquisition of the VDA and the transfer price to the employee. The transfer price will be deemed to be the cost of acquisition for employees.

“Norms are being worked out… These will be issued soon,” a government official told the financial daily. Also, credit card rewards points and e-vouchers will not be treated as VDAs. The clarification may clearly define the rules for determining the cost of acquisition of VDAs.

The Centre is considering a few models, including first-in-first-out method followed for demat securities, weighted average, or lastin-first-out format to know the cost of acquisition.

The explanation could also clarify the timeline of payment of tax deducted at source (TDS). “The clarification would address some of the concerns raised by the industry,” the daily quoted another official as saying.

The crypto industry wants the tax to be allowed to be paid on or before the due date for TDS payment.

Sudhir Kapadia, national tax leader, EY, told the daily: “Regarding TDS at 1 per cent on consideration in kind or in exchange on transfer of VDA, it is technologically not possible to ensure tax payment before release of consideration as such exchange happens instantaneously. It should be clarified that tax can be paid as per normal due dates for TDS payments.”