Income Tax website rectifies error, Government sticks to 1% TDS on virtual assets
Relief was shortlived for Indian crypto exchanges as the Income Tax portal has updated its document on Tax Deduction as Source (TDS), restoring the TDS on Virtual Digital Assets (VDAs) at 1 percent.
The website earlier mentioned that the TDS rate for virtual digital assets has been dropped to 0.1% from 1% as announced earlier in the budget. However, after the change was noticed by many the website updated the document rectifying the error.
This drew mixed responses from the industry, while some welcomed the change, others suspected it to be an error on the website.
The website had also added that no tax will be applicable, if the aggregate value does not exceed Rs. 10,000 during the financial year and does not exceed Rs. 50,000 during the financial year, which remains unchanged.
The 1% TDS is set to be applicable starting July 1 and has been the key reason for a drastic drop in volumes on Indian crypto exchanges, worsened by the global crypto crash.
The industry has been in talks with the government for months now regarding the 30% tax and additional 1% TDS. Experts have been strongly criticizing the move as it was seen as a major deterrent for those involved in crypto trading.
The industry has been saw this as a burden for both, the customer as well as the government, as it involves seeking a tax refund at the end of the financial year for each time the TDS has been deducted.
This move comes at a time when the crypto industry is facing dwindling transaction volumes for the last two months. Starting April, Indian exchanges saw a significant drop with 30% tax being implemented.
Moneycontrol earlier reported that transaction volumes plunged by 55 percent while domain traffic dropped by 40 percent on India's top cryptocurrency
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