TDS applicability when Purchased Crypto Currency

TDS (Tax deducted at source) when you purchased Bitcoin or Crypto Currency

• 1% Tax deducted at source on the sales transaction will be applicable if a customer exchanges a Bitcoin or Crypto Currency or Virtual Digital Assets to purchase another Bitcoin or Crypto Currency or Virtual Digital Assets. For Example, if you used 1000 USDT to purchase Bitcoin worth $1000, you would be obliged to pay the Tax deducted at source of 1% of 1000 USDT, or roughly 10 USDT.
• Bitcoin or Crypto Currency & NFTs (Non-fungible tokens) are currently unregulated in India. While RBI had sought to ban Bitcoin or Crypto Currency in 2018, According to the Hon’ble Supreme Court quashed attempted ban leaving Bitcoin or Crypto Currency in Law & regulatory limbo – neither illegal nor, strictly speaking, legal. NFTs (Non-fungible tokens) do not appear to have attracted the same level of regulatory ire as Bitcoin or Crypto Currency However suffer from same uncertain law or legal existence as Bitcoin or Crypto Currency.
• Minister of Finance announced the Bitcoin or Crypto Currency tax in India at a flat rate of 30 % on any income from the transfer of Virtual Digital Assets in the In Union Budget 2022. Moreover, New section 194S under income tax has been introduced for dedicated to the treatment of TDS in the event of a transfer of a Virtual Digital Assets was also announced.

What is 1% Tax deducted at source on Bitcoin or Crypto Currency?

• As per the Income tax Act & Rules, it is compulsory for the buyer of a Bitcoin or Crypto Currency or Virtual Digital Assets to deduct TDS @ 1 % of the amount paid to the seller (Indian resident). Tax deducted at source came into force from July 1 for transactions more than INR 10,000/-.

How Tax deducted at source will be deducted on Bitcoin or Crypto Currency?

• Any purchase of Bitcoin or Crypto Currency above the said amount qualifies for 1% Tax deducted at source. Moreover, if the Bitcoin or Crypto Currency investor's Permanent account number is not linked to the Virtual Digital Assets or is not available at the time of virtual asset realisation, the Tax deducted at source will be deducted TDS at the rate of 20%.

Is Tax deducted at source (TDS) automatically deducted from Bitcoin or Crypto Currency?

• As per Crypto Currency or crypto tax bill, Bitcoin or Crypto Currency mining is not taxable under the income tax Act.

No Set-Off or Carry Forward of Losses

• According to the Income Tax law income or gains from Virtual Digital Assets are taxable but no relief is provided in the event losses are incurred, and, to that extent Virtual Digital Assets are income taxed differently than most other assets in India

How can I save Tax deducted at source (TDS) on Crypto Currency in India?

• Investor should be Keep the Income or gains in stablecoins like Bitcoin or ETH or any other Crypto Currency.
• Get indirect exposure to like Bitcoin or ETH or any other Crypto Currency.
• Tax payer should hold onto your like Bitcoin or ETH or any other Crypto Currency for the long term.
• We should Keep the Income gains in stablecoins Bitcoin or Crypto Currency.
• Taxpayer should Sell during a low-income year.

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