Cryptocurrencies: Since the announcement of 30 percent tax and 1 percent TDS on cryptocurrencies in Budget 2022, a crypto trade volume of about Rs 32,000 crore has shifted from Indian crypto exchanges to foreign crypto exchanges. Delhi-based think tank The Asia Center has released a study report, according to which crypto trade volumes have shifted to foreign exchanges between April and October after the announcement of tax on cryptocurrencies in the budget.
According to the study, due to the current tax structure, there could be a loss of exchange trade volume equal to Rs 99.3 lakh crore in the next four years. According to the report, in the crypto trade volume of Rs 32000 crore, Rs 25,300 crore had gone out in the first six months itself. Due to the domestic market condition and tax structure, the Indian crypto exchange has decreased by 60.8 percent in trade volume.
While budgeting for the 2022-23 financial year, Finance Minister Nirmala Sitharaman imposed a 30 percent tax on the profits from cryptocurrency, which has come into effect from April 1, 2022. From April 1, 2022, the rule of 30 percent income tax recovery with surcharge and cess is applicable on the transfer of all cryptocurrencies like bitcoin. After this, the provision of imposing 1% TDS (Tax Deducted At Source) on payments made on transfer of Virtual Digital Assets (VDAs) i.e. cryptocurrency and non-fungible token (NFT) has come into force. 1 percent TDS was imposed on transactions above Rs 10,000. If the buyer does not have PAN at the time of transfer of cryptocurrency, then there is a rule to levy tax at the rate of 20 per cent. And if the buyer has not filed income tax return then TDS has to be paid at the rate of 5%.
From July 1, 2022, TDS will have to be paid on all crypto transactions, whether sold at a profit or at a loss. Meaning, investors who do not sell cryptocurrencies profitably will also have to pay tax. In such a situation, investors investing in crypto will have to pay one percent TDS so that the government can trace the whereabouts of those who transact in cryptocurrency. Recently, the government told the Parliament that since the implementation of the TDS recovery rule on all virtual digital assets including cryptocurrencies, the government has earned Rs 60.46 crore as tax.
