Parliament Member Says 1% TDS Will Kill Crypto Asset Class in India – A member of the Indian parliament has warned that levying a 1% tax deducted at source (TDS) on all cryptocurrency transactions will eliminate the nascent asset class.
This tax measure was passed by the Lok Sabha, India’s lower house of parliament, in the Finance Bill 2022. The TDS on crypto transactions, on the other hand, is for tracking purposes, according to India’s finance minister.
The Lok Sabha, India’s lower house of parliament, passed Finance Bill 2022 on Friday, which includes a plan to tax cryptocurrency revenue at 30% and levy a 1% tax deducted at source (TDS) on every transaction.
The 1% TDS will go into effect on July 1st, whilst the 30% income tax will go into effect on April 1st.
A member of Parliament, Ritesh Pandey, raised concern over the 1% TDS on cryptocurrency transactions. In the Lok Sabha, he explained how the Bitcoin industry will be suffocated by this tax.
According to him, if a user buys cryptocurrency, then transfers the coins to a wallet, and afterwards uses the coins to buy a non-fungible token, the user will be charged a 1% TDS at each stage.
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“It will give birth to red tapism if you apply a 1% TDS in three stages. This will also bring an end to this asset class, which is still relatively new.
According to Indian Finance Minister Nirmala Sitharaman, the 1% TDS on bitcoin is for tracking purposes and is nothing new.
She indicated in parliament on Friday that TDS (tax deducted at source) is more for tracking. It isn’t a new tax, and it isn’t an additional tax.”
The following points were emphasized by the finance minister:
“It’s a tax that will make it easier for individuals to keep track of, but the taxpayer can always reconcile it with the overall tax due to the government.”
Parliament Member Says 1% TDS Will Kill Crypto Asset Class in India – Many members of India’s crypto community, however, agree with Parliament Member Pandey that imposing a 1% TDS on cryptocurrency will have a negative impact.
“No loss setoff plus 1% TDS will push a lot of traders to halt day trading or to transfer to international exchanges & dex,” Aditya Singh, co-founder of the Crypto India Youtube channel, said.
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He warned, “This will result in liquidity crises on Indian exchanges as well as fewer trading fee collections, leading to lower GST revenue.”
“Strangling the golden goose with 1% TDS is a good example,” said Nischal Shetty, the founder of bitcoin exchange Wazirx. He stated his viewpoint as follows:
“I hope the government rethinks this and lowers or eliminates the TDS to help the crypto business expand even more.”