Crypto Exchange to Brief Policymakers on TDS Tangles

The industry body representing cryptocurrency exchanges has decided to reach out to relevant policymakers to brief them about complications arising out of the government’s move to levy a 1% TDS on all crypto transactions.

The issue was discussed at the meeting of the Blockchain and Crypto Assets Council (BACC) on Saturday, where the overwhelming view was that this move would dent crypto trading volumes and drive small traders towards informal person-to-person (P2P) trading and decentralized exchanges (DEX).

Crypto exchanges derive a large chunk of their revenues from traders who frequently trade and pay a small sum on every trade.

According to the provisions of this year’s finance bill, the buyer of a cryptocurrency has to deduct 1% of the sale consideration and pay the amount as an advance tax to the government on behalf of the seller on every trade.

The withholding will apply where sale consideration is more than or equal to Rs.50,000 (for specific individual payers) and Rs.10,000 for others.

TDS must be deducted on both crypto-to-rupee and crypto-to-crypto swaps.

But people opposed to these provisions say the provisions are impractical and will lead to complications in compliance, thereby discouraging trading on formal exchanges.

For instance, to pay advance tax, the buyer needs to have details of the seller, such as name, PAN number, etc. As this information lies with the exchanges, not with the buyer, the buyer won’t be able to remit money to the government. S-ET

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