Although the Indian Government did not put up a ban on crypto assets, they’ve taken a different approach to it. The latest financial budget talked about crypto taxation of up to 30% and an additional TDS of 1% on every crypto transaction. However, an Indian Parliament member believes that TDS on crypto will kill the asset class in the country.
The 30% income tax on crypto assets will start to begin after 1st April On the other hand, 1% Tax deduction on Source (TDS) will begin after 1st July. Parliament Member Ritesh Pandey raised concerns regarding the TDS collection on crypto transactions.
During a session at the lower house of the Parliament, he said:
“When you impose a 1% TDS at three stages, it will give birth to red-tapism. Doing so will also finish this asset class, which is very young.“
He gave an example saying that if a user purchases crypto, transfers it to his wallet, and purchases an NFT, he’ll pay 1% TDS at each stage.
Finance Minister Nirmala Sitharaman said that 1% TDS on crypto is for tracking purposes. In her words:
“It is a tax that will help people track it, but at the same time the taxpayer can always reconcile it with the total tax to be paid to the government.“
Regardless of this, the crypto community has the same concerns that parliament member Pandey had talked about.
Recently, the founder of WazirX, Nischal Shetty said regarding the 1% TDS:
“1% TDS is an example of killing the golden goose. Hope to see the government revisit this and reduce or eliminate this TDS in order to help the crypto industry grow further.“