The Indian government announced on June 22nd that 1% TDS will be deducted from all cryptocurrency transfers beginning in July. The tax will not only be imposed on the currencies but on all blockchain digital assets, including non-fungible tokens.
Since NFTs and cryptocurrencies have created a buzz among investors within a few years, the Central Government decided to regulate all the virtual assets through a Cryptocurrency Bill. The TDS will be regulated not only on the transactions but also on the profits the traders gain.
At the 2022 Budget Meeting, the Finance Minister stated that, since a huge number of cryptocurrencies are being bought as well as sold, by imposing taxes, the government will be able to keep a trail of the financial transactions.
1% TDS by the seller on the transaction: pic.twitter.com/rJVEEtzH6c
— Deepak Shenoy (@deepakshenoy) February 1, 2022
Who can withhold the TDS imposed on cryptocurrency transactions?
On the 22nd of June, another declaration came from the CBDT (Central Board of Direct Taxes) about withholding TDS under certain circumstances. The CEO of a cryptocurrency platform, Giottus, Vikram Subburaj, stated that they are glad that the central government has taken the initiative to spell out the responsibilities and key circumstances of exchange encounters and crypto traders.
The CBDT also clarified that the TDS imposed on crypto transactions could only be withheld by the buyer, a broker, or a crypto exchange before being paid to the seller; this means that the TDS will always be imposed on the selling price beginning next month.
1% TDS on Crypto transactions means you pay 1% of your order to the govt every-time you place an order.
This is a major problem with proposed taxation.#ReduceCryptoTax
— Neeraj, CoinDCX (@nrjkhandelwal) March 24, 2022