Gift cards or vouchers that may be used to obtain goods or services on a discount on goods,, mileage points, reward points, and loyalty cards will be excluded from the definition of virtual digital assets (VDAs), Central Board of Direct Taxes (CBDT) said in a notification issued late Thursday. Hence, these products do not face the tax applicable on VDAs such as cryptocurrencies and non-fungible tokens (NFTs), introduced in the last budget. The clarification has come on the backdrop of 1% TDS rules for VDAs transactions becoming effective from today (July 1, 2022).
The CBDT notification said, “The Central Government hereby notifies following virtual digital assets which shall be excluded from the definition of a virtual digital asset. (i) gift card or vouchers, being a record that may be used to obtain goods or services or a discount on goods or services; (ii) Mileage points, reward points, or loyalty card, being a record given without direct monetary consideration under an award, reward, benefit, loyalty, incentive, rebate or promotional program that may be used or redeemed only to obtain goods or services or a discount on goods or services; (iii) Subscription to websites or platforms or application.”
The clarification has come on the backdrop of 1% TDS rules for VDAs transactions becoming effective from today (July 1, 2022).
The one per cent TDS on VDAs’ transactions comes into play from today, July 1, 2022, in addition to a 30 per cent rate on income from activities on such assets, but notification has clarified that some items won’t be counted as digital assets. All virtual digital assets (VDAs) transactions, including those involving cryptocurrencies and non-fungible tokens (NFTs), worth more than ₹ 10,000 will be subject to the TDS deduction from today, July 1, 2022.
