Crypto investors in India were waiting impatiently for clarity on how the government plans to tax these assets. In Budget 2022, Finance Minister Nirmala Sitharaman announced that India will tax all “virtual digital assets" at 30% from April 1. Analysts see the 1% TDS (tax-deductible at source) applicable to every single transaction involving crypto as a problem.
Heavy tax incidence will discourage investors. "Compliance needs to be smoothed out. Especially around TDS. There are a lot of gaps in how VDAs have been defined. Special circumstances such as staking, forking, receiving cryptos as salary, spending crypto to buy goods and services, and P2P arrangements, also need to be taken into consideration in due course," said Archit Gupta, Founder and CEO - Clear.
The recipient is now liable to pay 30% of his return as tax, irrespective of his level of income. “Although cryptocurrencies are described as assets in the budget, they are being handled differently than other assets. The biased behaviour with cryptocurrencies in the recent budget could have some serious impact on the industry. People also feel that higher taxes will force the industry to leave the country. Some even think that too high a tax may prompt the industry to operate underground as well as move upcoming innovations overseas," said Kunal Jagdale, Founder, BitsAir Exchange.
1% TDS is making the traders, investors, exchanges and other people engaged in this market worried.
“The main question that is plaguing the exchanges is whether 1% TDS will affect volumes, as it will affect all the payments made for transactions of these assets. People are saying that imposing a 1% withholding on the total trade value would make various types of trading, including day
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