Crypto TDS India Latest News: Eyeing huge revenue from crypto trading activities, the Government in Budget 2022 announced its decision to impose 1% TDS on all crypto/virtual digital asset transfers.
Even on Tuesday (8th March 2022), Finance Minister Nirmala Sitharaman said the government is seeking a possibility of revenue in crypto. (read full report here).
Not just 1% TDS on crypto transfers, the Government also announced a flat 30% tax on profit from crypto transactions.
Crypto industry stakeholders, including individual investors and traders, have been demanding a reduction in crypto tax and TDS rate.
According to WazirX founder Nischal Shetty, 1% TDS on crypto trading will result in huge loss of tax revenue for the Government.
ALSO READ | How will 30% crypto tax actually work
Sharing a calculation in support of his claim, Shetty said in a series of tweets, “Crypto assets of Indians would be around $3B If we assume a net profit of 10% overall, total profit for Indians would be $300M. At 30%, that’s $100M payable income tax. Which means, Indian Gov would need to refund $900M in TDS each year. But, By locking this $900M, the Gov would cripple traders and prevent them from trading due to lack of capital. Effectively, this would drastically reduce the potential to earn profit. This in turn would affect the $100M in income tax earnings of the government.”
“So, By bringing a 1% TDS: 1. Trading volume goes low. 2. Trading profits go down. 3. Large number of TDS refunds need to be processed. 4. Massive income tax loss to the Gov,” he added.
The WazirX founder further said the solution to this “lose-lose situation” for both crypto traders and Governemnt is 0.1% TDS.
“An absolute lose-lose situation for both, Gov as well as the people. Solution is, 0.1% TDS, which would mean $100M in TDS. That’s the income tax generated from our calculations above. Very little to refund, traders don’t get affected much, they can continue to trade and make more profits. More profits = more income tax for the Government.”