The Income Tax Department’s website updated its document on TDS on Wednesday, reiterating that the tax deduction at source on virtual digital assets or VDAs remains at 1%, as mentioned in this year’s budget.
The portal had earlier mentioned that the TDS rate for VDAs has been reduced from 1% to 0.1% as announced earlier in the Union Budget for 2022-23. However, the IT department soon updated the document correcting the error.
Income Tax India wrote on Twitter, “Some media reports have come to the notice of CBDT, claiming that the rate of TDS on Virtual Digital Assets (VDA) has been reduced to 0.1%.”
“It is clarified that there is no change in the rate of TDS on VDA, which is 1%,” it added.
Several cryptocurrency platforms and investors were seen discussing the issue on social media platforms.
The portal had also said that no tax would be applicable if the total value does not exceed 10,000 during the financial year and does not exceed 50,000 during the financial year, which remains unchanged.
What is 1% TDS on crypto trading?
After 30% taxation on gains from cryptocurrency assets, the Center will levy 1% TDS on every business transfer or consideration with effect from July 1, 2022.
While industry players see the move as one of the most controversial provisions on cryptocurrency taxation, the Center believes that the new TDS mechanism is used to trace transactions and prevent tax evasion. .
TDS is a liability applicable against exchanges that collect tax on behalf of sellers on the platform. It will be calculated at 1% of the transaction value.