The cryptocurrency industry has urged Central Government to reconsider the budget proposal to impose a 1 percent tax deducted at source (TDS), on virtual digital asset transactions. They said that it will be difficult to comply with.
Further, the industry has urged to reconsider the decision to levy a tax of 30% on current market value when crypto assets are gifted or given to employees as part of their remuneration, mentioning the tax is levied without waiting for the receiver to sell it and book any profit.
On 11th February, representatives of leading domestic crypto exchanges discussed the issues with Finance Ministry officials and gave their representation on some of the key concerns. Earlier, tax experts had also sought clarity regarding cryptocurrency earning.
Finance Minister in her fourth Union Budget on 1st February, 2022, has proposed a 30 per cent tax on gains made from any virtual digital assets from April 1. The budget has also proposed a 1 per cent TDS on payments towards virtual currencies beyond Rs 10,000 in a year and taxation of such gifts in the hands of the recipient.
However, as per industry experts crypto-assets taxation required more deliberation before implementation as the budget proposals lack clarity on many issues. “They are not banning crypto but killing it with tax compliance. TDS is technically not feasible as tracking down identity becomes difficult,” a crypto industry official familiar with the matter told ET.