Rethink TDS: Crypto industry to govt

Cryptocurrency industry has urged the government to give a second thought to its decision to levy a tax of 30% on current market value when crypto assets are gifted or given to employees as part of their remuneration. It argued that the tax is levied without waiting for the receiver to sell it and book any profit. The industry also nudged the government to re-examine the budget proposal to impose a tax deducted at source, or TDS, on virtual digital asset transactions. It believes that such a move be difficult to comply with.

Finance minister Nirmala Sitharaman had proposed a 30% tax on gains made from any private virtual digital assets from April 1. She also spoke about a 1% TDS on payments towards virtual currencies beyond Rs 10,000 in a year and taxation of such gifts in the hands of the recipient. Experts are of the opinion that there is also a lack of clarity on how it will apply in various other situations like barter.

Representatives of leading domestic crypto exchanges submitted their representation on some of the key concerns to finance ministry officials on Friday, when they met to discuss budget proposals. “The introduction of crypto tax under the income-tax regime is nothing less than a knee-jerk reaction to tax a fast-building parallel ecosystem currency,” opined Saurrav Sood, practice leader, SW India.