TDS on cryptocurrency transfers starts July 1

27 Jun 2022 , 10:15 AM

TDS of 1% on cryptocurrency transfers is expected to be into effect on July 1. Depending on the type of transaction, the buyer, crypto exchanges, and brokers will each be responsible for withholding this tax, according to CBDT.

Come July 1, your cryptocurrency sales will be subject to a 1% tax deducted at source (TDS).

This rule will apply to any transfers of virtual digital assets (VDAs) worth more than Rs10,000, such as those involving cryptocurrencies and non-fungible tokens (NFTs).

In recent years, cryptocurrencies have drawn a lot of investors and generated a lot of noise. The tax agency wants to guarantee its piece of the pie even if a cryptocurrency bill to govern digital assets is under consideration.

The federal government included a provision for TDS on the transfer of VDAs and tax on earnings from such transfers in this year’s Budget in order to achieve this goal. Finance Minister Nirmala Sitharaman had previously stated, “We are only taxing the profit produced on these assets as a significant number of crypto assets are being bought and sold; we are now applying taxation on cryptos so we know who is buying them and keep an eye on the money trail.

Regarding who is in charge of withholding TDS in particular circumstances, there were some ambiguities, nonetheless. On June 22, the Central Board of Direct Taxes (CBDT) clarified its position on important matters. Tax consultants and business people in the industry appreciate the clarifications.