A member of the Indian parliament has cautioned that levying a 1% tax deducted at source (TDS) on all cryptocurrency transactions will eliminate the young asset class. This tax provision was included in the Finance Bill 2022, which was enacted by the Lok Sabha, India’s lower house of parliament. The TDS on crypto transactions, on the other hand, is for tracking purposes, according to India’s finance minister.
A Member of Parliament Expresses Concern over the 1% TDS on Cryptocurrency Transactions
The Lok Sabha, India’s lower house of parliament, passed Finance Bill 2022 on Friday, which includes a plan to tax cryptocurrency revenue at 30% and levy a 1% tax deducted at source (TDS) on every transaction. The 1% TDS will be implemented on July 1st, whereas the 30% income tax will be implemented on April 1st.
Ritesh Pandey, a member of Parliament, expressed concern over the 1% TDS on cryptocurrency transactions. In the Lok Sabha, he described how the crypto industry will be suffocated by this tax. For example, if a user purchases crypto, then transfers the coins to a wallet, and then uses the coins to purchase a non-fungible token (NFT), the user will be charged a 1% TDS at each stage, according to him. He screamed:
It will give birth to red tapeism if you apply a 1% TDS in three stages. This will also bring an end to this asset class, which is still relatively new.
The 1% TDS on bitcoin, according to Indian Finance Minister Nirmala Sitharaman, is for tracking purposes and is nothing new.
“TDS (tax deducted at source) is more for tracking,” she remarked in parliament on Friday. It is neither a new nor an additional tax.” The finance minister stressed the following:
It’s a tax that will make it easier for individuals to keep track of, but the taxpayer can always reconcile it with the overall tax due to the government.
Nonetheless, many members of India’s crypto community agree with Parliament Member Pandey that placing a 1% TDS on crypto will have a detrimental impact. “No loss setoff + 1% TDS will push a lot of traders to halt day trading or to transfer to international exchanges & dex.
Aditya Singh, the co-founder of the Crypto India Youtube channel, said. “This will result in liquidity crises on Indian exchanges as well as lower trading fee collection, resulting in lower GST revenue,” he warned.
“1 percent TDS is an example of strangling the golden goose.
Nischal Shetty, the founder of cryptocurrency exchange Wazirx. He expressed his opinion saying :
“I hope to see the government examine this and lower or eliminate this TDS in order to assist the crypto industry’s growth.“
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