Indian Crypto Exchanges Welcome Clarification of New Tax Regulations

As trading volumes drastically decline, crypto exchanges worldwide are cutting costs and firing hundreds of people. However, the Indian government has provided clarity and joy on taxing digital token transactions. With effect from the start of the next fiscal year, the union budget for 2022–23 announced a 30% tax on cryptocurrency profits and a 1% TDS on all transactions starting from July 1. Indian crypto exchanges have cause for celebration, notwithstanding these challenging times. The Central Board of Direct Taxes released long-awaited clarifications on the applicability of the TDS laws on Wednesday. Still, the administration ignored calls to cut the TDS rate to 0.01% or 0.05%. It dispels doubt by addressing some of the industry’s worries and assisting exchanges and dealers in navigating the onerous TDS regulations. Payments made for cryptocurrencies over Rs 10,000 per financial year or Rs 50,000 per year for specific individuals, such as individuals and HUFs that must get an ITR, are subject to a 1% TDS. New Tax Regulations The new regulations require exchanges to deduct tax on the crypto buyer’s transaction side. This tax must be paid to the center within 30 days in the month-end in which the deduction is made. The government has clarified that those requesting a tax refund must present a TDS certificate granted to the payee within 15 days of the tax’s payable date. The inability to offset cryptocurrency losses against gains remains a sticking problem. According to Edul Patel, co-founder of Mudrex cryptocurrency exchange, TDS on loss-making transactions is refundable. The circular stated that TDS applies to payments made in kind or in exchange for other digital assets when transferring cryptocurrency. It is unknown now if the TDS clause applies to international crypto trading sites. To eliminate any remaining ambiguity, CBDT will likely publish a frequently asked questions document.

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