The Indian government has brought in some much-needed clarity—and cheer—in the matter of taxing digital token transactions.
The union budget for 2022-23 had declared a 30% tax on income from cryptocurrencies from the new financial year and a 1% TDS on all crypto transactions starting July 1.
The industry stakeholders have, since then, made several requests to the government to lower the TDS rate from 1% to 0.01% or 0.05%, but to no avail. This had left the industry under a cloud, shrinking trade volumes.
Until the central board of direct taxes (CBDT), on June 22, clarified (pdf) how firms could comply with the revised tax. The latest move has reinforced confidence that the government may come up with more such clarifications, contrary to the possibility of a complete ban earlier.
“Investors can now plan their trades with clarity…believe that the government will monitor the implementation and consider reducing the TDS percentage to create a healthy and compliant ecosystem,” Vikram Subburaj, CEO of crypto platform Giottus, said.
What are the new tax rules?
Exchanges will have to deduct tax from the crypto buyer’s side in a transaction, according to the new rules. This tax must be paid to the centre within 30 days of the end of the month during which the deduction was made.
Users who claim a refund on their taxes from the government must show a TDS certificate issued to the payee within 15 days from the due date of reporting the tax, the government has clarified.
While TDS on loss-making transactions is refundable, the inability to offset crypto losses against gains remains a sticking point, said Edul Patel, co-founder of Mudrex, another crypto exchange.
Payment for the transfer of cryptos done in kind or in exchange for another digital asset also attracts TDS, adding to the total, the circular said.
Whether the TDS provision applies to foreign crypto trading platforms is not known yet. CBDT is likely to issue a frequently asked questions document to clear any further confusion.
This story originally Appeared on Yahoo