• Notification Date: 07.02.2022
  • Notification No: N/A

Crypto Exchanges to clarify Policymakers about TDS Complications

The cryptocurrency industry body has approached the relevant policymakers to clarify their doubts and complications regarding the issues arising out of the government’s imposition of a 1% TDS on all crypto transactions. The issue of this rising concern on TDS application on cryptocurrency was discussed in detail at the meeting of the Blockchain and Crypto Assets Council (BACC) last Saturday. The meeting was conducted with the intention of decreasing crypto trading volumes. It was expected that this new move would influence the small traders in approaching informal Person to Person (P2P) trading and decentralized exchanges (DEX).

A massive amount of revenues is collected by the crypto exchanges from the crypto traders. The traders often trade and pay a small amount on each trade. The new tax provisions of the present financial year’s bill have introduced 1% TDS on the buyers of cryptocurrencies. The trader has to pay the amount of tax as an advance tax to the government. The payment has to be made on behalf of the seller on every trade.

There will be a withholding applicable on the sale consideration of more or equal to Rs.50,000 for the specific individual payers. The sale consideration will be applicable for an amount more than or equal to Rs.10,000 for others. The deduction of TDS will be applicable on both crypto-to-rupee as well as crypto-to-crypto swaps.

Several people have protested against this imposition of TDS on crypto trading claiming it to be impractical. They are further discouraging trading on formal exchanges saying that this would lead to further complications in compliance. In such cases, the buyers will have to acquire the information of the seller such as the name and PAN number. This information lies with the exchanges and not with the buyer. As a result, the buyer is unable to remit the money to the government.