The government may take into account imposing TDS/TCS on sales and purchases of cryptocurrencies that exceed a specific threshold in the upcoming budget.
The Indian government is contemplating the introduction of tax reforms on cryptocurrency trading in the upcoming Budget 2022-23. Nangia Andersen LLP Tax Leader, Aravind Srivatsan, suggests that the government may consider levying Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) on the sale and purchase of cryptocurrencies above a specified threshold. Srivatsan also proposes a higher tax rate of 30% on the income generated from cryptocurrency sales, similar to the taxation of winnings from lottery and game shows. This move is expected to bring cryptocurrencies within the ambit of specified transactions for reporting to income tax authorities. Furthermore, Srivatsan highlights that India currently has the highest number of crypto owners globally, and it is projected that Indians’ investment in cryptocurrencies may reach USD 241 million by 2030. According to the news rajkotupdates.news : government may consider levying tds tcs on cryptocurrency trading
The government is considering the possibility of introducing Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) on the sale and purchase of cryptocurrencies in the upcoming Budget. This move aims to bring crypto trading within the reporting framework of the Statement of Financial Transactions and require individuals to report their crypto transactions to the income tax authorities. Aravind Srivatsan, the Tax Leader at Nangia Andersen LLP, suggested that a higher tax rate of 30% should be applied to the income generated from cryptocurrency sales, similar to the taxation of winnings from lotteries, game shows, and puzzles.
Highest Number of Crypto Owners Globally in India | rajkotupdates.news : government may consider levying tds tcs on cryptocurrency trading
Srivatsan highlighted that India currently has the highest number of crypto owners globally, with approximately 10.07 crore individuals involved in crypto trading. It is projected that Indian investments in cryptocurrencies could reach $241 million by 2030. He mentioned that a bill to regulate cryptocurrencies was expected to be introduced during the Winter Session of Parliament. However, the bill was not introduced, and there is now an expectation that it may be addressed in the Budget Session. A regressive tax regime for cryptocurrencies is anticipated to be implemented if the government does not forbid Indians from trading in cryptocurrencies.
Considering the size, risk, and market involvement associated with cryptocurrencies, Srivatsan suggested that changes might be made to the taxation of cryptocurrencies. This includes bringing them under the provisions of TDS and TCS for transactions above a certain threshold, allowing the government to track investor activity more effectively. Furthermore, he proposed that both the sale and purchase of cryptocurrencies should be reported in the Statement of Financial Transactions, similar to the existing reporting requirements for trading companies dealing with shares and mutual funds.
The Statement of Financial Transactions (SFT) serves as a mechanism for monitoring high-value transactions conducted by taxpayers. It allows tax authorities to collect information on specified transactions undertaken by individuals during the year. Financial institutions, companies, and stock market intermediaries are already subject to SFT reporting requirements. Srivatsan recommended applying a higher tax rate of 30% to the income derived from the sale of cryptocurrencies, aligning it with the tax treatment of winnings from lotteries and similar activities.
Before the Winter Session of Parliament concluded on December 23, the government had planned to introduce a bill to regulate cryptocurrencies. The bill’s introduction comes amidst concerns over misleading claims and the potential use of cryptocurrencies to lure investors. Presently, there are no specific regulations or bans on the use of cryptocurrencies in India. The “Cryptocurrency and Regulation of Official Digital Currency Bill” is now anticipated to be presented during the Budget Session of Parliament, which starts on January 31.
Additionally, the government is contemplating changes to income tax laws to include cryptocurrencies in the tax framework, and these changes may be incorporated in the 2022-23 Budget.
As India emerges as a major player in the global cryptocurrency market, the government is contemplating tax reforms to regulate this burgeoning industry. The Budget 2022-23 might witness the introduction of TDS and TCS provisions on cryptocurrency transactions, along with the inclusion of these transactions in the Statement of Financial Transactions. Additionally, a higher tax rate of 30% on income from cryptocurrency sales is proposed. These measures aim to enhance transparency, monitor high-value transactions, and ensure fair taxation. While the introduction of such reforms will bring more clarity to the taxation of cryptocurrencies,As per Article rajkotupdates.news : government may consider levying tds tcs on cryptocurrency trading, the final decisions regarding these proposals will be revealed in the Budget announcement.