The crypto industry and experts have welcomed the tax department's regulations on Tax Deduction at Source (TDS) to be applicable on cryptocurrency transactions. Though they have said that more clarity is required.
The income tax department on Thursday came out with disclosure requirements for TDS deductions for virtual digital assets (VDA), under which the date of transfer and mode of payment will have to be specified.
"It is not clear how the buyer, who is buying VDA on the exchange, will get to know whether the exchange is the owner of the VDA or someone else. Potentially, exchange(s) may find it convenient to hold the inventory and agree with the buyer that they will discharge the tax obligation on a quarterly basis. Another doubt is in relation to the obligation of the payment gateways – payment gateways are merely facilitators in the payment process; they do not per se incur any liability of their own. Expecting them to obtain undertaking from the payers appears onerous", Sunil Badala, Partner and Head, Financial Services, Tax, KPMG in India said in a statement.
Chennai-headquartered Giottus hopes the government will continue to review TDS on virtual digital assets or cryptocurrency and reduce the percentage. On the current regulations, Vikram Subburaj, CEO, Giottus said, "Investors can now plan their trades with clarity."
The tax department has said that with VDA provisions, no tax shall be required to be deducted considering the provisions regarding purchase of goods (without getting into the aspect whether VDAs are goods or not). Tax is to be deducted only on the net amount excluding the charges and GST.
Where payment is facilitated by a payment gateway, it is required to obtain an undertaking that the payer has deducted tax.
Published 24 June 2022, 06:05 IST