Tax Deduction at Source – TDS on Crypto In India 2022 – Explained

Dear Crypto Investor, We recognize that you might be a little unsure about how taxation and TDS would affect your cryptocurrency holdings as of July 1st, 2022 around the corner. Don’t worry we have covered all the bases and made an easy summary for our users.

1% TDS on Cryptocurrency Transactions in India

According to new government guidelines, investors of crypto assets must pay 1% TDS on their transactions from July 1st, 2022. Through the passage of the Finance Act 2022, Section 194S was added to the Income Tax Act. According to the new section, the selling or transfer of a virtual digital asset (VDA) must deduct income tax on that money in an amount equivalent to 1% of the payment which comes under TDS.

What is Section 194S for VDAs in India?

The Finance Bill 2022 has proposed a new section 194S that will take effect on 1 July 2022 and mandate the deduction of tax at source @ 1% on the payment of purchase consideration to a resident person on transfers of virtual digital assets.

Note:

No tax shall be deducted under this provision in the following circumstance:

• If the consideration is payable by any person (other than a specified person) and its aggregate value does not exceed Rs. 10,000 during the financial year.

• if the consideration is payable by a specified person and its aggregate value does not exceed Rs. 50,000 during the financial year.

For More Details – Click Here

BuyUcoin prioritizes compliance and standards issued by the Finance Ministry and RBI in order to safeguard the investment of users.

All the TDS liabilities are on the exchange and not on the users as per government guidelines. So, BuyUcoin will be deducting the 1% TDS on every transaction from July 1st, 2022 onwards. Complete and updated Terms & Conditions will be sent and conveyed to all users in due course; in the meanwhile, please refer to the pointers listed below.

Applicability of Higher TDS ( Upto 5% ) on Crypto:

TDS will be levied on the user’s applicability under section 206AB (Click here to read the detailed explanation of section 206AB). As there is no way to determine the net revenue of individual & corporate users so, TDS will be deducted on every transaction made on the exchange.

As most of the crypto investors fall under the 1% TDS bracket, A small portion of us will also be required to pay a higher 5% TDS. As Section 206AB states if the underlying conditions are not met, Exchange is liable to deduct higher TDS up to 5% as per government guidelines –

The person does not file the income tax return for the financial year (before Budget 2022, two FY) immediately preceding the FY in which tax is required to be deducted,
where the income tax return (not belated return) filing due date is expired and
The total amount of deduction and collection of tax (TDS and TCS) is Rs.50,000 or more in each of these two previous years.

Click for more details

Points to Consider for Higher TDS on Crypto in India

The provisions of Section 206AB will not apply in cases where the amount does not exceed
a. For Business ( sales, gross receipts or turnover ) – INR 1 Crore
b. For Individual ( salary on service ) – INR 50 lakh,
in the previous financial year with respect to the current year in which such VDAs were transferred or sold.
At the end of the financial year, while filing ITR if you have TDS receivables and your calculated tax is coming out less than your receivable TDS then you can file for TDS returns and government is liable to pay. BuyUcoin will also provide a TDS certificate every quarter on your transactions to ease the process.

Important Document to Understand TDS on Crypto in India

What is Section 206AB – Click Here to Learn
How and When Higher TDS is Applicable – Click Here to Learn
How to Claim Yout TDS Refund – Click Here to Learn

Trading on BuyUcoin

BuyUcoin Web & App will be under maintenance until midnight to incorporate the guidelines provided by the government. You will not be able to access your account during this period, so we request you to plan accordingly. Please note that trading may continue to be disabled for a few coins even after the changes due to certain TDS-related implications. We apologize for the inconvenience.