The crypto industry had expected some good news on the tax front, but the annual budget for the next fiscal betrayed their hopes.
Months of lobbying by Indian and global crypto firms to see if the local tax laws will provide some leeway proved futile. The Indian Finance Minister, in her budget speech for the 2023-24 fiscal, did not mention crypto or virtual assets at all.
No relief in existing crypto taxes has been granted.
Crypto Taxes Unchanged
Indian crypto sector’s hopes of tax relief from the budget for the next fiscal presented yesterday were met with disappointments. The government did not provide any relief in the existing 1% TDS and 30% on crypto gains, media reports said.
Nor did it change the offsetting of losses against profits on different crypto trades. In fact, Finance Minister Nirmala Sitharaman did not mention the term crypto or virtual digital asset even once in her budget speech.
Indian crypto exchanges, which saw their trading volume plummet following the introduction of crypto taxes in the last budget, had been demanding to bring down the 1% TDS to more reasonable limits of 0.01% to 0.1%.
Avoiding TDS Punishable
The government has announced penalty provisions for non-payment of TDS by using non-compliant or offshore platforms. The penalty would be equal to the amount of TDS evaded. Besides, it can also attract a prison term of up to six months. Late payment of TDS will be punished by a 15% interest per annum, crypto tax advice platform KoinX said in an explainer on Twitter.
A recent report claimed that over $3.8 billion in trading volume moved overseas crypto platforms from India in the nine months since crypto taxes were introduced.
“The TDS of 1% for crypto transactions remains as it is. But there is a clarification. The onus of deducting TDS has been on crypto exchanges or on the user (if using P2P or other means), but until now there was no penalty for non-deduction,” said Ashish Singhal, co-founder and CEO of CoinSwitch Kuber.
Indian Exchanges May Benefit
The penalty for failure to pay TDS by using non-compliant or offshore platforms is likely going to help Indian platforms that profess to abide by local laws and tax obligations.
“… don’t try to avoid TDS by using offshore or non-compliant platforms. You may be penalized as per Section 271C of the #IncomeTax Act. If you are investing in crypto, use a tax-compliant platform,” said Singhal on Twitter.News Source