India’s Income Tax office has clarified some confusion that arose on June 8 over its Tax Deductible at Source (TDS) rate for digital assets transactions. The government maintains that TDS remains at 1% for digital assets.
The clarification came after some observers noted that the TDS rate on the Income Tax Office’s website was reflected to have been changed to 0.1%. Kashif Raza, the founder of India-based Web3 education platform Bitinning, was one of the first observers to point out the change.
He, however, told his close to 90k Twitter followers that the change had not been confirmed and could be a typographical error.
As per the industry leaders till last week they were trying to convince the govt to revise the rates.
But they haven't received any official confirmation.
So this could be a typo error as well.
So keep calm and DYOR!
— Kashif Raza (@simplykashif) June 8, 2022
In a statement on Twitter, the Income Tax office confirmed his disclaimer to be the case. The error was also rectified on the website to reflect the correct rate.
Some media reports have come to the notice of CBDT claiming that the rate of TDS on Virtual Digital Assets(VDA) has been reduced to 0.1%.
It is hereby clarified that there is no change in the rate of TDS on VDA, which continues to be 1%.@FinMinIndia
— Income Tax India (@IncomeTaxIndia) June 8, 2022
India’s digital currency tax regime could stamp out the industry
The 1% TDS was first introduced in India’s budget for the 2022-2023 fiscal year, along with a 30% tax on capital gains for digital currency trading. While the 30% came into force on April 1, the TDS provision took effect from June 1.
There has been a concerted outcry in the country that the TDS rate will hurt digital currency trading volume and exchanges. Before the budget was passed, industry leaders had been petitioning for changes to be made.
One petition started on Change.org by digital currency YouTuber Aditya Singh demanded that the government should reduce the TDS rate to 0.05%. It also added that the 30% tax rate should be aligned with what is obtainable for stocks, and investors should be allowed to offset losses from digital currency trading in their taxes.
While the pleas have not affected the government’s stance so far, industry leaders have continued to call for India to make laws to clarify the murky digital currency regulatory climate. The CEO of one of India’s biggest digital currency exchanges CoinSwitch, Ashish Singhal, told Reuters that implementing laws for the industry would improve the market.
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