The exchange agreed under the CBDT guidelines to pay the 1% on its own sale to me. How does that get reported, and where do I see it?
Through Form 26QF, filed quarterly by the exchange. Where an exchange has agreed, under the guidelines issued under s.194S(6), to pay the tax on a transfer of a virtual digital asset owned by it instead of the buyer deducting, rule 31A(1) requires the exchange to deliver a quarterly statement of those transactions in Form 26QF. Sub-rule (4E) also requires the exchange to furnish particulars of amounts paid or credited on which no tax was deducted in accordance with the guidelines.
Decided by the CBDT Circulars & Instructions (Central Board of Direct Taxes) on 2022-06-30, reported as Notification No. 73/2022 dated 30.06.2022; G.S.R. 482(E) — Income-tax (20th Amendment) Rules, 2022. It bears on section 194S, section 200, section 203A of the Income Tax Act 1961, in Crypto & Virtual Digital Assets and TDS Defaults matters.
This is the rule that makes the written agreement in Circular 13/2022 work — without it there was no return in which an exchange could report tax it had paid on its own transactions, and a buyer relieved of the deduction had nothing to point to. It matters on the other side too: sub-rule (4E) makes the exchange report the trades on which nothing was deducted, so the department receives the no-TDS transactions as well, and those are exactly the entries that surface later as unexplained volume.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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Under the guidelines issued under s.194S(6) an exchange that itself owns the virtual digital asset being transferred may, by written agreement with the buyer, undertake to pay the tax that the buyer would otherwise have deducted. The existing quarterly statements were built around a deductor with a TAN reporting deductions made from payees, and had no place for tax paid by an exchange on its own transfers, or for transactions on which the guidelines required no deduction. With effect from 1 July 2022 the Board inserted a proviso to rule 31A(1) and a new sub-rule (4E), and notified Form 26QF.
An exchange that has agreed under the s.194S(6) guidelines to pay tax on a transfer of a virtual digital asset owned by it, as an alternative to deduction by the buyer, must deliver a quarterly statement of those transactions in Form 26QF; and when preparing that statement it must furnish particulars of amounts paid or credited on which tax was not deducted in accordance with those guidelines.
The guidelines had already moved the obligation to the point in the chain that knows the seller and controls the money, but a shifted obligation still has to be reported by somebody. The proviso to rule 31A(1) supplies the return; sub-rule (4E) closes the gap the guidelines create, because the same guidelines relieve certain transactions from deduction altogether and, without reporting, those transactions would leave no trace with the department at all. The result is that the exchange, rather than the individual buyer, becomes the department's reporting point for the trades it intermediates — the pattern later carried much further by s.285BAA.
the Exchange shall deliver or cause to be delivered, a quarterly statement of such transactions in Form No. 26QF
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Handle my notice → Ask a CA on WhatsAppThrough Form 26QF, filed quarterly by the exchange. Where an exchange has agreed, under the guidelines issued under s.194S(6), to pay the tax on a transfer of a virtual digital asset owned by it instead of the buyer deducting, rule 31A(1) requires the exchange to deliver a quarterly statement of those transactions in Form 26QF. Sub-rule (4E) also requires the exchange to furnish particulars of amounts paid or credited on which no tax was deducted in accordance with the guidelines. This was decided by the CBDT Circulars & Instructions (Central Board of Direct Taxes) and bears on section 194S, section 200, section 203A of the Income Tax Act 1961. It is reported as Notification No. 73/2022 dated 30.06.2022; G.S.R. 482(E) — Income-tax (20th Amendment) Rules, 2022. This is the rule that makes the written agreement in Circular 13/2022 work — without it there was no return in which an exchange could report tax it had paid on its own transactions, and a buyer relieved of the deduction had nothing to point to. It matters on the other side too: sub-rule (4E) makes the exchange report the trades on which nothing was deducted, so the department receives the no-TDS transactions as well, and those are exactly the entries that surface later as unexplained volume. If it applies to you, the first step is this: Where you dealt with an exchange as counterparty, keep the written agreement and check that the trade appears in the exchange's Form 26QF reporting before assuming your own obligation is discharged.
Under the guidelines issued under s.194S(6) an exchange that itself owns the virtual digital asset being transferred may, by written agreement with the buyer, undertake to pay the tax that the buyer would otherwise have deducted. The existing quarterly statements were built around a deductor with a TAN reporting deductions made from payees, and had no place for tax paid by an exchange on its own transfers, or for transactions on which the guidelines required no deduction. With effect from 1 July 2022 the Board inserted a proviso to rule 31A(1) and a new sub-rule (4E), and notified Form 26QF. The matter was decided on 2022-06-30 by the CBDT Circulars & Instructions (Central Board of Direct Taxes). On those facts the CBDT Circulars & Instructions held as follows. An exchange that has agreed under the s.194S(6) guidelines to pay tax on a transfer of a virtual digital asset owned by it, as an alternative to deduction by the buyer, must deliver a quarterly statement of those transactions in Form 26QF; and when preparing that statement it must furnish particulars of amounts paid or credited on which tax was not deducted in accordance with those guidelines.
The guidelines had already moved the obligation to the point in the chain that knows the seller and controls the money, but a shifted obligation still has to be reported by somebody. The proviso to rule 31A(1) supplies the return; sub-rule (4E) closes the gap the guidelines create, because the same guidelines relieve certain transactions from deduction altogether and, without reporting, those transactions would leave no trace with the department at all. The result is that the exchange, rather than the individual buyer, becomes the department's reporting point for the trades it intermediates — the pattern later carried much further by s.285BAA. In the words reproduced by the source cited on this page: "the Exchange shall deliver or cause to be delivered, a quarterly statement of such transactions in Form No. 26QF"
It was decided by the CBDT Circulars & Instructions on 2022-06-30 and is reported as Notification No. 73/2022 dated 30.06.2022; G.S.R. 482(E) — Income-tax (20th Amendment) Rules, 2022. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 194S, section 200, section 203A, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. An exchange that has agreed under the s.194S(6) guidelines to pay tax on a transfer of a virtual digital asset owned by it, as an alternative to deduction by the buyer, must deliver a quarterly statement of those transactions in Form 26QF; and when preparing that statement it must furnish particulars of amounts paid or credited on which tax was not deducted in accordance with those guidelines. It arises in Crypto & Virtual Digital Assets and TDS Defaults matters, on section 194S, section 200, section 203A of the Income Tax Act 1961, and was decided by Central Board of Direct Taxes. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Reconcile your trade log against both the deducted and the not-deducted columns, since the exchange reports both. If you run an exchange, file Form 26QF for each quarter in which the alternative payment route was used, and populate the sub-rule (4E) particulars rather than leaving them blank. Read this with Circular 13/2022 — the rule provides the return, the circular decides who is meant to be using it.
Still good law. The consolidated text of rule 31A on the department's own site still carries both limbs inserted by this notification: the proviso to rule 31A(1) requiring an Exchange that has agreed under the s.194S(6) guidelines to pay the tax to deliver a quarterly statement in Form No. 26QF, and sub-rule (4E) requiring particulars of amounts paid or credited on which tax was not deducted in accordance with those guidelines. The footnote to sub-rule (4E) records only the original insertion - 'Inserted by the IT (Twentieth Amdt.) Rules, 2022, w.e.f. 1-7-2022 [Corrected vide Corrigendum G.S.R. 505(E), dated 1-7-2022]' - and no later amending or superseding notification. Two limits on that: the department's /w/ pages have been found elsewhere to be stale snapshots (its /w/section-56 page still lacks clause (x), and /w/section-115qa shows only the 2013 insertion), so a very recent amendment would not necessarily show; and the Income-tax Rules, 2026 have been notified for the Income-tax Act, 2025, but the department serves them only through a JavaScript utility that could not be read, so the successor to rule 31A and to Form 26QF was not examined. That finding was checked against a published source, which is linked on this page, on 2026-08-20. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The text was read from an official PDF of the notification hosted on a government site, and the operative phrase is quoted from it. The notification does not itself create the alternative payment route — that is done by the guidelines under s.194S(6), namely Circular 13/2022, which the corpus already holds. Nothing on the pages consulted states the due dates for Form 26QF beyond its being quarterly, and the current status of the rule under the Income-tax Rules, 2026 was not checked. A corrigendum is recorded against this insertion - the departmental text of rule 31A is reported to note that it was corrected vide Corrigendum G.S.R. 505(E) dated 1 July 2022 - but that could not be confirmed: the official PDF cited as the source carries no corrigendum note, and the department's rule page could not be read, so the terms of the corrigendum have not been checked and it is not asserted here. The due dates for Form 26QF and the consequences of not filing it are not stated on the pages fetched. It does not deal with deduction by a broker, with consideration in kind, or with the buyer's own Form 26QE obligation. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
An exchange that has agreed under the s.194S(6) guidelines to pay tax on a transfer of a virtual digital asset owned by it, as an alternative to deduction by the buyer, must deliver a quarterly statement of those transactions in Form 26QF; and when preparing that statement it must furnish particulars of amounts paid or credited on which tax was not deducted in accordance with those guidelines.
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