1% TDS On Crypto – Top Tweets, CoinDCX

The crypto community is engrossed in catching up on everything around the implementation of the 30% tax on crypto profits as well as the additional 1% TDS on crypto. Read top threads on Twitter to follow the news in real-time!

Twitter Session – CoinDCX with Vinay Tiwari

As the government had mentioned in the budget session 2022 that there will be 1% TDS applicable on crypto starting July 1, 2022, along with the 30% tax on virtual digital assets, the Head of Finance at CoinDCX, Vinay Tiwari sat with Simplykasif and Meyya to describe the very same for our community. 

Twitter thread recording

To summarise the session:

• Firstly, what is TDS? TDS stands for Tax Deducted at Source.
• The 1% TDS in crypto will be applicable to your crypto selling transactions and not on your crypto profits.
• According to the new Income Tax Law, the concept of TDS was introduced to cut the TDS from the income source itself.
• The amount deducted as TDS is then remitted to the Central Government’s account by the tax deductor. 
• To understand the concept better, let us take up a non-crypto example:

Mathematical deductions  ABC Ltd. to pay Mr. XYZ = ₹ 40,000 TDS = 1% TDS by ABC Ltd. = 1% of ₹40,000 = ₹400 Net payment done to Mr. XYZ = ₹39,600 Tax credited to govt. account = ₹400

Also Read: Guide to 30% Crypto Tax in India

• Now let us take a crypto example to understand the TDS better.
  

Suppose Mr. XYZ has bought BTC worth ₹ 40,000. When he goes to sell the BTC, the amount went up to  ₹ 40,500. Thus, the profit is ₹500 and the 1% TDS will be ₹ 45. This ₹ 45 will be deducted from Mr. XYZ when he sells the BTC.

• You can use the CoinDCX app to download your TDS statement. 
• Now, since the profit from these transactions has been ₹500, there will be a 30% tax applicable on the profit amount. This amount however will be paid by the investor directly. The 30% tax will not be deducted by the exchange.

Top Questions Asked?

• Can you clear my doubt? For each and every trade(any value) TDS will calculate and deducted from our trade?

Anytime you sell any crypto, there will be a deduction of 1% TDS from the value. Deposits, withdrawals, or on purchasing of crypto-asset there will not be any TDS applicable.

• Would be TDS applicable on transferring on other exchanges or wallets? 

No. TDS is only applicable when you are selling any crypto.

• What is the  1% TDS?

To understand the 1% TDS in detail please read our blog on Crypto TDS

Sumit Gupta’s – Twitter 

Now that we have understood what TDS is and when it will be applicable for investors, here’s Sumit Gupta, the CEO, and co-founder of CoinDCX, take on TDS and why it is a decision that needs to be relooked at. 

¼  TDS on CoinDCX

@CoinDCX has implemented the TDS on all products as per government regulations and is fully compliant. But for the sake of the industry and for the government’s own benefit the government needs to rethink this decision

1/5 There is a lot of hullabaloo around #TDS on #crypto@CoinDCX has implemented it on all products as per government regulations and we are fully compliant. But for the sake of the industry and for the government’s own benefit I urge them to rethink this decision

Here’s why 🧵

— Sumit Gupta (CoinDCX) (@smtgpt) July 4, 2022

2/4 TDS’s effect on the Government

By imposing 1% TDS on every trade, the government will be losing out on tax revenue

1.00% TDS – 96.88% loss of tax

0.10% TDS – 49.47% loss of tax

0.01% TDS – 1.52% loss of tax

2/5 By imposing 1% TDS on every trade, the government will lose out on tax revenue

1.00% TDS ➡️ 96.88% loss of tax
0.10% TDS ➡️ 49.47% loss of tax
0.01% TDS ➡️ 1.52% loss of tax

Have put together an excel sheet to explain this. Check out the video! 📈

— Sumit Gupta (CoinDCX) (@smtgpt) July 4, 2022

Here’s the excel sheet explaining the calculations

¾ Effect of TDS on Exchanges

With 1% TDS, trading frequency is likely to drop in just 7 months! And volumes are expected to go down in 10 months.

Whereas with 0.01%, we see consistent growth in trading volumes and frequency even after 18 months! 

3/5 With 1% TDS, trading frequency is likely to drop in just 7 months! And volumes are expected to go down in 10 months.

Whereas with 0.01%, we see consistent growth in trading volumes and frequency even after 18 months! 🚀

— Sumit Gupta (CoinDCX) (@smtgpt) July 4, 2022

Download India’s simplest crypto investment app, CoinDCX

4/4 IS TDS the only Way?

Tracking transactions can be done via different methods. Is TDS really the right solution? Or will it cater towards creating more problems?

4/5 Tracking transactions can be done in other ways too. Is TDS really the right solution? Or will it create more problems?

Something to think about? 🤔

— Sumit Gupta (CoinDCX) (@smtgpt) July 4, 2022

Top Questions Asked?

• And one more thing sir, we should be allowed to set off losses either with other crypto pairs or with other fiscal years? 

Setting off losses is not allowed. However, the 30% Tax will be applied to the profit garnered during every financial year.

• How to check TDS on the CoinDCX app

TDS on the CoinDCX app can be checked on the Order Page. To understand the TDS and its jargon better here is a compiled list of Crypto 1% TDS Glossary.

• TDS implication on Crypto SIP, Earn, and Crypto referrals

There will be no TDS on Crypto SIP, Earn, and Crypto referrals since these are PURCHASE/ BUY orders and TDS is only applicable when there is a SELL order. TDS is only applicable when there is a sell order. Know more Crypto SIPs at CoinDCX

How will 1% TDS on Crypto be applicable?

To understand how the 1% TDS will be applicable, here is a step-by-step walkthrough.

As per the Income Tax department, the 1% TDS will be applicable starting from July 1, 2022.

To understand the 1% TDS better, here is another example: 

The 1% TDS will be applicable only on sell orders in case of INR transactions, whereas, the 1% TDS will be applicable on both sell and buy transactions in case of Crypto-to-crypto transactions.

 

To check your TDS statement on the CoinDCX app, all you have to do is click on the Order Details button. If you want to check the TDS amount before selling, click on the (i) button on the Sell Order screen.

Summing it Up!

The 1% crypto TDS is already in place. To keep up with the latest news on crypto tax and other crypto news, keep an eye out for the CoinDCX Blog. Here are some of the recent crypto tax articles by CoinDCX.

Additional Read:

Top Queries on Crypto Tax 2022 by CoinDCX Community

Crypto Airdrops Tax in India

1% TDS for CoinDCX Pro

1% TDS for the CoinDCX App

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Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. In case you have any queries, write to [email protected].

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