TDS on every crypto transaction makes compliance tedious.
Since the new crypto tax regime was announced, the whole community is dreading the Tax Deduction at Source (TDS) on crypto transactions.
That’s why the industry approached the Finance Ministry to amendment in the TDS provisions, as the Finance Bill will be approved in the ongoing Budget Session 2022 of the Parliament, reported Economic Times.
The industry representative body, Blockchain and Crypto Assets Council (BACC) has presented the plea before the Ministry.
According to two persons, these crypto platforms that are members of the BACC have recommended that the proposed TDS be reduced to about 0.01%.
“Crypto platforms have recommended a range, and urged the finance ministry to consider it,” said one of the people who is familiar with the discussions. “Even if things are not resolved before the next financial year begins, the industry is hopeful that the TDS requirement may reduce in the next 2-3 quarters.”
Startup industry body IndiaTech has also written to the Minister of Finance, Ms. Nirmala Sitharaman and the Revenue Secretary, Mr. Tarun Bajaj, requesting the elimination of the TDS entirely or to bring it down to 0.01%.
“If the intent of the proposals was to seek additional revenues from such crypto assets, then the 1% tax on the entire transaction value will render the business unviable, thereby having an impact on government revenues forcing investors and those engaging in trade to operate overseas or be forced to resort to operating through opaque P2P methods,” IndiaTech, an industry association representing consumer Internet startups, wrote in the letter.
IndiaTech expressed concerns that compliance becomes tedious with the TDS. Rather, it recommended a uniform PAN-based KYC to track transactions and instituting a mechanism under the Suspicious Transaction Reporting Mechanism of the Financial Intelligence Unit.
“While we raised many issues that require clarifications from the finance ministry, however, what needs to be immediately relooked at is the manner of treatment … The 1% tax at source also makes it unviable and if track and trace was the intent, a 0.01% can serve that intent.”Rameesh Kailasam, Chief Executive of IndiaTech.
On Monday, Sumit Gupta, the co-founder and CEO at CoinDCX, also expressed his disapproval of the proposed crypto tax.
Crypto tax is a big step towards regulation. Taxation is a continuous process. Government may revise the rates as it builds confidence. Earlier the Government sought to ban digital assets. Now, it has recognized them. This is a significant shift in perspective. But taxation should not be detrimental to the industry as it kills innovation.
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