The crypto space has seen massive adoption among the Indian mass since 2020. If you are new to the space, crypto tokens are basically decentralized digital assets that are usually traded and invested in, much like other traditional assets. The most interesting aspect of these digital tokens is their underlying blockchain technology. This public ledger makes any transactions made within the space visible to everyone.
Owing to the rising popularity of the crypto space, during the Budget 2022 session, the Hon’ble Finance Minister Mrs. Nirmala Sitharaman announced revolutionary changes to the virtual asset class. Considering the magnitude and frequency of these transactions, the government has proposed the following specific tax regime for the industry:
- Income from the transfer of any virtual digital asset to be taxed at the rate of 30%
- TDS of 1% to be levied on payments made for the sale of virtual assets
- The gift of virtual digital assets is proposed to be taxed in the hands of the recipient
As per the regulations, the tax of 30% on your annual returns will be applied annually, during every financial year-end, while the 1% TDS was made effective from 1st July, 2022 on all sell orders and NFTs. Complying with government regulations, CoinDCX is implementing the same on their CoinDCX App.
Also Read: Crypto Tax in India
CoinDCX App:
To simplify your understanding of when a TDS will be deducted while you are using the CoinDCX app, here’s a list.
| Buy | No TDS |
| Sell | 1% TDS |
| Limit Buy | No TDS |
| Limit Sell | 1% TDS |
| CIP | No TDS (as it’s a buy transaction) |
| Earn | No TDS |
Note: In compliance with this, all users will have to mandatorily complete their KYC process at the earliest in order to make any transaction (Buy/Sell) on CoinDCX. We would urge you to complete your KYC well in advance, to avoid any delays.
For example, if you create a Sell order for BTC at INR 10,000, your order summary will look as follows:
Estimated Order Value = INR 10,000
TDS applicable (1% of 10,000) = INR 100
Transaction Fees (0.2% of 10,000) = INR 20
Hence, Total Order Value* (what you get) = INR 10,000 – (100 + 20) = INR 9,880
Your order summary will then be:
Is the 1% TDS Mandatory for all investments?
According to the revised Income Tax regulations, the TDS of 1% will be applicable which went into effect from July 01, 2022, on all sell transactions of crypto assets and NFTs. However, this amount may be claimed as a refund while filing ITR for the financial year if income tax payable is less than the TDS deducted.
When will the 1% TDS apply?
The TDS will be applicable on every sell transaction on all crypto assets. Before selling a crypto asset, you can see the TDS deductions by clicking on the (i) button on the SELL ORDER screen. You can also check the “Order Details” page to view your TDS deductions for each transaction.
Thus, you do not have to pay TDS to withdraw INR from the CoinDCX wallet into your bank account as you have already paid TDS when you sold your crypto and got INR in return in your wallet.
Images for reference:
How To Stay TDS Compliant?
Following the announcement of the 1% TDS on crypto, the Indian Government did not touch the Virtual Digital Asset topic during this year’s Union Budget 2023. However, there was a new addition to the Finance Bill 2023. The new amendment that was included in the Income Tax Act under section 271C, stated that non-payment of TDS would incur a penalty amount which will be equal to the unpaid TDS that will be imposed by a joint commissioner or a jail term for up to six months. In case of any delay, this can amount to an interest rate of 15% per annum for late payment.
To simplify it further for you, CoinDCX have set up a seamless procedure to help you keep a tab on all your TDS payments; within the CoinDCX App!
- CoinDCX will share TDS statements with its customers at periodic intervals for keeping a record and keeping the users updated on further developments.
- CoinDCX pays the TDS on user’s behalf every time they do a transaction on the app.
- Users can then get access to their TDS report & summary along with their TDS certificate at the click of a button on the app itself to file their returns in the future.
Additional Read: Tips to file Crypto TDS &The Financial Bill Update
All you have to do is, Go to Account > Download Report
And then click on TDS Summary or TDS Certificates
Will the 1% TDS be applicable if the investor is paying 30% tax?
The 30% tax is payable on gains arising from the sale of crypto assets. This rule came into effect back on April 1, 2022. The 1% TDS is a separate tax that will be deducted from the sell value of crypto assets. Hence, yes, you will have to pay the 30% tax on gains arising from the sell of crypto assets along with the 1% TDS.
For example, if an investment of INR 1,00,000 was made in crypto at the beginning of FY2022, and by the end of FY2022, the crypto was sold for INR 1,50,000, a TDS of 1% will be applicable on the total value of the transaction i.e. Rs. 1% of INR 1,50,000 which is INR 1,500. This shall be deducted by CoinDCX against the PAN details of the seller and deposited to the Government on behalf of the seller.
In addition to this, a flat 30% tax rate is also applicable on income gain of INR 50,000. So, as an investor, you will be liable to pay INR 15,000 as tax on crypto income in that financial year. This shall be paid by the seller while filing their ITRs.
You can also file for a TDS refund based on your income slabs, for more detailed information visit Income Tax India – File TDS Return.
For all your queries, click on FAQs.
Disclaimer: According to the CBDT circular dated June 23, 2022 [read here], TDS is applicable on the Net order amount. In simple words, the Net order amount is the transaction value minus the exchange fees. In order to comply with the revised Income Tax regulations, we will be soon shifting to the NET TDS DEDUCTION formula, as per which the calculation is to be set at 1%. To understand this better, please refer here.
