January, 2024 – Issue No. I


An e-commerce operator shall deduct income-tax at the rate of one per cent of the gross amount of sale of goods or provision of service, or both, facilitated through its digital or electronic facility or platform [Section 194-O of Income Tax Act, 1961. Vide CBDT Circular No. 20/2023 dated 28.12.2023 guidelines have been issued for removal of difficulties and clarity has been provided on various issues pertaining to applicability of section 194-O of the Act. The said Circular is available on www.incometaxindia.gov.in.


Section 2(47A) of Income Tax Act, 1961 defines Virtual Digital Asset. It inter alia states that it refers to any digital representation of value that can be digitally traded, transferred or used for payment. Virtual asset service providers or VASPs is a broad term that refers to companies providing services related to crypto-currencies. Virtual Digital Asset Service Providers (VDA SPs) operating in India (both offshore and onshore) and engaged in activities like exchange between virtual digital assets and fiat currencies, transfer of virtual digital assets, safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets etc. are required to be registered with FIU IND [Financial Intelligence Unit, India] as Reporting Entity and comply with the set of obligations as mandated under Prevention of Money Laundering Act (PMLA) 2002. The obligation is activity-based and is not contingent on physical presence in India. The regulation casts reporting, record keeping, and other obligations on the VDA SPs under the PML Act which also includes registration with the FIU IND. Till date 31 VDA SPs have registered with FIU IND. However, several offshore entities though catering to a substantial part of Indian users were not getting registered and coming under the Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework. Action is being taken against them.

The Indian Tax Advisors