TDS will enable the Government to track transactions.
Friday saw a profound debate between the opposition and the Government about the new crypto tax law.
The Finance Minister of India, Ms. Nirmala Sitharaman said that crypto transactions are happening at a large scale in the country and they are needed to be brought under the tax net.
“We are very clear. Until we decide whether to regulate or ban it (crypto), we are taxing it. There is definitely commonplace knowledge that lots of transactions are happening. So obviously the government made its position clear that we shall tax the money.”Ms. Nirmala Sitharaman, Finance Minister
Along with the 30% income tax on cryptocurrencies, a 1% Tax Deduction at Source (TDS) will be levied on every sale transaction.
She justified TDS that it is for tracking. It is not an additional tax or a new tax. The taxpayer can reconcile it with other taxes.
“The person who is paying the TDS can always reconcile it with his other taxable income. That is the reason, in general, our tax base is widening and TDS is a legitimate way for tracking the transactions and widen the base.”
According to her, TDS will provide a trail of the people who are spending money. This trail will help the Government track the people who are avoiding taxes.
The crypto community of India is not dreading the Income Tax as much as the TDS because with TDS lesser money will remain with an investor/trader after every sale transaction. This will render crypto trading infeasible as traders conduct numerous transactions in a single day. Ultimately, they will lose out on their capital.
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