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How the 1% TDS Proposal On Cryptocurrency Transactions Will Work


India with nearly 1.4 billion people is one of the fastest growing markets in the world for crypto trading

New Delhi:

The Lok Sabha today passed the Finance Bill, which impacts a new tax on transactions involving digital assets. The bill proposes a 30 percent tax on capital gains from virtual digital assets. Once passed into law, 1 percent TDS will also be charged on each such transaction.

During the debate on the Finance Bill in the Lok Sabha, the Opposition said that the government was still sending mixed signals on virtual digital assets, and stressed there should be clarity on the definition of crypto.

Bahujan Samaj Party (BSP) leader Ritesh Pandey said that introducing 1 per cent TDS on blockchain transactions would hinder the way this business is done.

Mr. Pandey explains how the tax will work with an example. In the first transaction, the user will buy a cryptocurrency. They will then transfer it to the wallet. Using the balance in the wallet, users can purchase unusable tokens (NFT).

Consumers will be charged 1 percent TDS at each of these three stages.

“When you impose 1 per cent TDS on three levels, it will give birth to a red tapism. Doing so will also end this asset class, which is very young,” the BSP leader said.

“Amitabh Bachchan has launched his NFT. And if consumers want to buy the NFT of their favorite movie poster or star signature, they have to pay the TDS three times,” the BSP leader said in the Lok Sabha.

India with nearly 1.4 billion people is one of the fastest growing markets in the world for cryptocurrency trading, but the country has hot and cold ties with virtual coins. The Reserve Bank of India had banned crypto transactions effectively in 2018, but the Supreme Court overturned the ban last year.

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