A member of the Indian Parliament has warned that imposing a 1% tax on issuer (TDS) on every crypto transaction would kill the emerging asset class. This tax provision was included in the Finance Act 2022 passed by the lower house of the Indian Parliament, the Lok Sabha. However, the Indian Finance Minister insists that the tax withheld at source on crypto transactions is for traceability purposes.
MP raises concerns over 1% TDS on crypto transactions
The Lok Sabha, India’s lower house of parliament passed the Finance Bill 2022 on Friday which includes a proposal to tax crypto income at 30% and introduce a 1% tax deductible at source (TDS) on every crypto transaction. The 1% TDS tax will go into effect on July 1 while the 30% income tax will start on April 1.
Member of Parliament Ritesh Pandey has raised concerns about 1% TDS on crypto transactions. he is to explain In Lok Sabha, how this tax will kill the cryptocurrency industry. For example, he said that if a user buys cryptocurrencies, then transfers them to a wallet, and uses them to purchase a non-fungible token (NFT), the user will be charged 1% of the total total tax (TDS) at each stage. Shouted:
When you impose 1% TDS on three phases, it will generate a red bar. Doing so will also terminate this asset class, which is very small.
However, Indian Finance Minister Nirmala Sitharaman claims that the 1% TDS on cryptocurrency is for tracking purposes and is nothing new.
She said in Parliament on Friday: “TDS (taxes withholding at source) are more traceable. It is not an additional tax and it is not a new tax.” Minister of Finance confirmed:
It is a tax that will help people keep track of it, but at the same time the taxpayer can always reconcile it with the total tax to be paid to the government.
However, many people in the crypto community in India agree with MP Pandey about the negative impact that 1% of the total tax on cryptocurrency would have.
Aditya Singh, who co-founded the Crypto India Youtube channel, hung: “The lack of compensation for loss plus 1% TDS will force many traders to stop day trading or switch to international and crypto exchanges.” “This will lead to liquidity crises in Indian stock exchanges as well as lower collection of trading fees and consequently lower GST revenue” for the Indian government, he added.
The founder of crypto exchange Wazirx, Nishal Shetty, pointed That “1% TDS is an example of killing the golden goose.” He said:
I hope you see the government reconsider this and reduce or eliminate TDS in order to help the crypto industry grow even more
What do you think about how India plans to tax crypto income and transactions? Let us know in the comments section below.
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