I-T Department rectifies gaffe, sticks to 1% TDS on virtual assets. Read here

livemint.com:

The Income Tax Department's website on Wednesday updated its document on TDS, reiterating that the tax deductible at source on virtual digital assets or VDA remains at 1%, as informed in the this year's budget.

The portal mentioned earlier that the TDS rate for VDA has been dropped to 0.1% from 1% as announced earlier in the Union Budget for 2022-23. However, the I-T department soon updated the document rectifying the error.

Taking to Twitter, Income Tax India wrote, “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 added, “It is hereby clarified that there is no change in the rate of TDS on VDA, which continues to be 1%."

Many cryptocurrency platforms and investors were seen discussing the issue on social media platforms.

The portal had also added that no tax will be applicable, if the aggregate value does not exceed ₹10,000 during the fiscal and doesn't exceed ₹50,000 during the financial year, which remains unchanged.

What is 1% TDS on crypto trade?

Following the 30% taxation on the gains arising from the cryptocurrency assets, the Centre will implement the 1% TDS on the transfer or consideration of every trade from 1 July, 2022.

While the industry players see this move as one of the most controversial provisions over the cryptocurrency taxations, the Centre believes that the new TDS mechanism is used to trace transactions and prevent tax evasion.

TDS is a liability enforced against the exchanges that deposit tax on behalf of sellers on the platform. It will be calculated at 1% of the transaction value.