A tax deducted at source (TDS) of one percent will be implemented from July 1, 2022, after a 30 percent tax on crypto asset gains, which will take effect on July 1, 2022. There is still a lot of confusion about how the government intends to collect taxes and the different parts of the TDS, according to the exchanges. Let’s understand the latest updates as Cryptocurrency exchanges to pay 1% TDS from Next Month.
What is Cryptocurrency?
Cryptocurrency is a form of digital currency. It is kept secured through blockchain and cryptography. In India, the cryptocurrency is treated as an asset and is taxed at flat 30%. This implies Income tax must be paid by investors through ITR Filing on gains from the buying and selling of cryptocurrency. Additionally, investors must pay taxes on cryptocurrency transactions.
What is TDS?
TDS stands for Tax Deducted at Source. TDS was designed to collect taxes directly from the source of income. A person (deductor) who is obligated to pay a defined amount to another person (deductee) must deduct tax at source (TDS) and deposit it to the government through TDS Return Filing.
Latest News: Cryptocurrency Exchanges to pay 1% TDS
According to reports, the Cryptocurrency exchanges are preparing their infrastructure for the one percent TDS that will take effect from the beginning of next month i.e. 1st July 2022.
Taxation Departments have also reportedly met with crypto exchanges in recent weeks to discuss the implementation of the tax.
Cryptocurrency exchanges’ business group has contacted key officials to inform them of the difficulties coming from the government’s decision to impose a 1 percent TDS (tax deduction at source) on all cryptocurrency transactions.
The government claims that the new TDS system will be useful to track transactions and combat tax loopholes, despite the fact that the sector sees this as one of the most problematic issues regarding the crypto taxes.
The new crypto tax legislation has been a major sore point for crypto firms, notably exchanges, who have frequently requested that the TDS be reduced or eliminated. Furthermore, cryptocurrency exchanges rely heavily on traders who often trade and pay a tiny fee for each transaction.
Cryptocurrency exchanges have urged to abandon the 1% TDS regulation, or at the very least reduce it to 0.01%.
What will the impact on traders as cryptocurrency exchanges to pay 1% TDS?
As cryptocurrency exchanges to pay 1% TDS, every transaction would result in a loss of 1% of an investor’s money. The excess TDS would be reimbursed to investors, but day traders and investors with short-term horizons would suffer as a result since it would reduce their capital. Furthermore, It is likely that a TDS of one percent will deter day traders, resulting in lower trade volumes overall.
Moreover, If you want any other guidance relating to TDS Return Filing or Income tax return filing, please feel free to talk to our business advisors at 8881-069-069.
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