In a detailed guideline, the Ministry Of Finance provided further details on the 1% TDS applicable to the transfer of cryptocurrencies. The rule will apply to all considerations which exceed Rs. 50,000 in value for certain specified persons and Rs.10,000 for others.
The Central Board of Direct Taxes made separate guidelines, applicable to transactions only through exchanges. It also specified that for peer-to-peer transactions, all taxes will be levied according to the provisions of Section 194S of the Income Tax Act 1961.
Decoding The TDS Guidelines
The guidelines specify that no tax will be deducted for depositing the money in exchanges. Moreover, the guidelines also exempt TDS when purchasing crypto through INR. However, TDS will be applicable when crypto-assets are sold in INR. For crypto to crypto exchange, TDS will be applied while both buying and selling the assets.
So far, the guidelines seem to apply to Indian exchanges.
Many people in the crypto community believe that the Central Board of Direct Taxes has implemented a well-thought strategy for the 1% TDS.
Edul Patel, CEO of the crypto investment platform Murdex, believes that the tax is implemented to curb illicit activities. He also points out that compared to other asset classes like Gold, 1% TDS is pretty low.
India’s Attitude Towards Crypto
The government of India recently levied a 30% percent tax on all cryptocurrency profits. It also clarified that loss incurred from trading one type of crypto cannot be offset by profits in another. Moreover, crypto miners in India also could not deduct infrastructure costs as a cost of acquisition.
While many in the crypto community saw the taxation as a massive burden, others like WazirX CEO Nischal Shetty applauded the move. He claims that for mass adoption of crypto in India, positive regulation of Crypto is needed.
All eyes remain on how the new tax codes will impact the Indian crypto industry.
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