An Indian MP has warned that imposing a 1% withholding tax (TDS) on every crypto transaction will kill the burgeoning asset class. This tax provision is included in the Finance Bill 2022 passed by the Lok Sabha, the lower house of the Indian Parliament. However, India’s finance minister insists that the TDS on crypto transactions is used for tracking purposes.
MP raises concerns about 1% TDS in crypto transactions
Lok Sabha, India’s lower house of parliament, passed Finance Bill 2022 on Friday, which includes a proposal to tax crypto income at 30% and impose a 1% withholding tax on every crypto transaction. The 1% TDS will come into effect on July 1st, while the 30% income tax will be levied from April 1st.
MP Ritesh Pandey raised concerns about the 1% TDS on crypto transactions. He explained in Lok Sabha how this tax will kill the crypto industry. For example, he said that if a user buys crypto, then transfers the coins to a wallet and uses them to purchase a non-fungible token (NFT), the user will be charged a 1% TDS at each stage. He exclaimed:
Imposing a 1% TDS in three phases will result in Red Tapism. This will also end this still very young asset class.
However, Indian Finance Minister Nirmala Sitharaman claims that the 1% TDS on crypto is for tracking purposes and is nothing new.
She said in Parliament on Friday: “TDS (tax deduction at source) is more for tracking. It is not an additional tax and it is not a new tax.” The finance minister stressed:
It is a tax that helps people track it, but at the same time, the taxpayer can always reconcile it with the total tax payable to the government.
Nonetheless, many people in the crypto community in India agree with MP Pandey on the negative impact a 1% TDS will have on crypto.
Aditya Singh, Co-Founder of Crypto India Youtube Channel, commented: “No loss recovery plus 1% TDS will force many traders to stop day trading or switch to international exchanges and indices.” GST Revenue” for the Government of India.
The founder of cryptocurrency exchange Wazirx, Nischal Shetty, written down that “1% TDS is an example of killing the golden goose”. He mean:
I hope the government will review this again and reduce or eliminate this TDS to help the crypto industry continue to grow
Tags in this story 1% tds, 1% tds india, 30% crypto tax, finance law 2022, india tax crypto, india tax cryptocurrency, indian finance minister, indian parliament, indian parliament member, indian tax, lok sabha, tracking tds
What are your thoughts on how India plans to tax crypto revenue and transactions? Let us know in the comment section below.
Kevin Helms
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