India’s Crypto TDS Rule Yields Millions to Treasury: Details
The outcry from crypto traders and investors went unheard after Indian Finance Minister Nirmala Sitharaman failed to revise the controversial collection of 1% TDS on every crypto transaction. Over the past nine months, this TDS collection is said to have brought over $19 million (about Rs 157 crore) to the Treasury. The detail was revealed in Parliament recently by Pankaj Chaudhary, who is the country’s Minister of State for Finance. The data traces ten months since the introduction of the TDS Act last July in India.
“The direct tax levied by means of tax withheld at source under section 1945 of the Income Tax Act 1961, on payments made on the transfer of virtual digital assets, s rises to Rs. 157.9 crore until 20/03/2023 for the financial year 2022-23,” Chaudhary said in a written update to the Upper House.
Indians last June started seeing 1% tax deductions on every crypto transaction. This basically means that one percent TDS is charged at every stage of buying, trading, and depositing crypto assets.
Not just on cryptocurrencies, this 1% TDS is also charged on transactions of other VDAs, such as non-fungible tokens (NFTs) and other metaverse items.
Between June and November of last year, the TDS collection of crypto transactions would have was worth $7.4 million (about Rs. 60 crore), Chaudhary informed at the time.
Over the past five months, this amount has increased by $11.6 million (roughly Rs. 95 crore) – indicating an increase in crypto transactions in India.
Time and time again, members of the Indian crypto community have urged the Ministry of Finance to review the 1% TDS and consider reducing it to promote the growth of the entire crypto sector.
In a tweet, Sathvik Vishwakarma, the CEO of crypto exchange Unocoin reacted to Chaudhary’s disclosure, calling the TDS rule a distraction in the growth of the digital asset industry in India.
The Indian government believes that by imposing a percent withholding tax (TDS) on every crypto transaction, it would be easier to keep track of them despite the element of anonymity that crypto transactions entail.
The crypto community in India is expected to overtake the US, UK, Russia and Japan in adoption this year. According to a recent report by Statista, the Indian crypto community is expected to encompass over 156 million users by the end of 2023.
Amid the expansion of the sector, the Indian government, through its crypto tax laws, seeks to curb any potential misuse of digital assets for illegal activities like money laundering and terrorist financing.
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