The crypto industry has urged the government to reduce the TDS on payment of profits from trading in cryptocurrencies to 0.01 or 0.05% from the proposed 1%, saying it would hurt retail traders.
As per the current crypto regulations, capital gains or gains on cryptocurrencies will be taxed at 30% along with an additional TDS tax of 1% on all trading transactions.
The Budget for 2022-23 has brought clarity regarding the imposition of income tax on crypto assets. From April 1, 30% IT plus cess and surcharge will be levied on such transactions in the same manner as it treats winnings from horse racing or other speculative transactions.
Also, while computing income from transfer of VDA, no deduction will be allowed in respect of any expenditure (other than cost of acquisition) or allowance.
The provisions relating to 1% TDS will come into effect from July 1, 2022, while the gains will be taxed with effect from April 1.
CoinDCX CEO and co-founder Sumit Gupta said that the 30% tax on cryptocurrency income is high and should be reduced.
“At industry (level), we are engaging with the government and have made a presentation on how 30 per cent tax and above, 1 per cent TDS is detrimental to the growth of the industry. It will lock up capital for traders. And suck the liquidity out of the market. If there is no liquidity, retail investors will suffer,” Gupta told reporters.
Meanwhile, he added that CoinDCX is also working with traders on its platform to comply with the new tax rules.
According to bitcoin.com, cryptocurrency volumes in India have dropped new laws to tax digital assets introduced on April 1. Parliament has approved the Finance Bill, which affects the crypto taxation laws announced in the budget.
“We will try to simplify it at our level but we will still continue the dialogue and continue the dialogue with the government and ask them to bring down the TDS (tax deducted at source) to 0.01 or 0.05%. Income tax of 30% also At the highest level, which we are requesting to bring them down,” Gupta said.