In the budget, it was proposed to levy 1 percent TDS for cryptocurrencies on payments above Rs 10,000 in a year and tax on the recipient of such gift.
There has been an opposition to TDS of one percent on digital assets. The people associated with the crypto industry had requested the central government to reconsider the decision to tax cryptocurrencies in the budget. Tax on cryptocurrencies will be applicable from April 1. This issue has also been raised in Parliament. Bahujan Samaj Party (BSP) MP Ritesh Pandey said this will encourage ‘red tape’ and stop the growth in digital assets.
The term ‘red tape’ refers to rules that are too stringent and people have to face difficulties. “When you levy TDS of one per cent in three phases, it will lead to red tape. By doing so digital assets will also suffer,” Pandey said. He said that cryptoTDS of one percent on transactions will be required to be paid in three phases, on purchase of cryptocurrency, transfer it to a crypto wallet and use of cryptocurrency to purchase any other digital asset like Non-Fungible Token (NFT). Some celebrities and movies have also launched NFTs in recent months .
He said that collectors who buy digital assets from the popular NFT series will have to pay more on account of tax. However, Finance Minister Nirmala Sitharaman says that TDS has been levied for the purpose of tracking the transactions. “It is not an additional tax and not a new tax. It will help in tracking,” he had said.
In the budget, it was proposed to levy a TDS of 1 per cent for cryptocurrencies on payments exceeding Rs 10,000 in a year and tax on the recipient of such gifts. The limit for TDS will be Rs 50,000 in a year for people falling in the special category. These include individuals/Hindu Undivided Families (HUFs) who will have to get their accounts audited under the Income Tax Act. No deduction of expenditure or allowance shall be allowed for computing the income from transactions in such assets. It has also been clarified that the loss arising from transfer of Virtual Digital Assets will not be allowed to be set off against any other income.