- India’s tax authorities have collected Rs 158 crore (approx. $19 million) in Tax Deducted at Source (TDS) on the transfer of virtual digital assets (VDA) till March 20, 2022-23.
- The government has imposed a 1% TDS on VDA transfers exceeding Rs 10,000 (approx. $125) in a financial year.
- In November, the minister informed the Indian Parliament that TDS collection on VDAs from July 1 to November 1 was Rs 60.46 crore ($7.4 million).
India’s 1% TDS on Crypto Transfers Yields $19 Million in 9 Months
Indian tax authorities have collected Rs 158 crore (approximately $19 million) in Tax Deducted at Source (TDS) on the transfer of virtual digital assets (VDA) till March 20, 2022-23. This number can be taken as final figure for the entire 2022-23 fiscal as it ended on March 31.
Taxation Regime Implemented by Government
The Indian government brought crypto transactions under a new tax regime through the budget for 2022-23. It provided for 1% TDS on VDA transfers exceeding Rs 10,000 (approx. $125) in a financial year and all gains from such transfers were subjected to an income tax of 30%. The 1% TDS was enforced from July 1, 2023. In November 2020, Minister of State for Finance Pankaj Chaudhary informed the Indian Parliament that TDS collection on VDAs from July 1 to November 1 was Rs 60.46 crore ($7.4 million).
Industry Expectations and Regulatory VacuumGiven the low tax collection figure, it was expected that the government would ease down the rate and bring it between 0.05% and 0.1%, which is what industry representatives had demanded earlier too but no such relief has been provided yet by authorities and subsequently crypto transactions were placed under Prevention of Money Laundering Act (PMLA). Surprisingly, this decision was welcomed by industry representatives as it provided some kind of clarity when facing a complete regulatory vacuum prior to this announcement .
High Tax Rate Making Crypto Trading Unviable h2 >
The high rate imposed by government along with low threshold set ($125 in one financial year ) made crypto trading unprofitable making exchanges unviable in India . Hence , despite welcoming decision by authorities , industry experts are still hoping for more favorable regulations so that crypto industry can flourish in India .
< h2 >Conclusion h2 >
Overall , India’s new taxation regime has yielded good result since its implementation but more needs to be done if we want our country’s crypto sector to reach its full potential .