The federal government, led by Prime Minister Narendra Modi, in its budget report for fiscal 2022-23, tabled in February, imposed a staggering 30 per cent tax on cryptocurrency investors.
Although the 30 percent tax was high, they were persuaded not to impose a ban. The 30 per cent tax will come into effect from April 1 and the additional tax will come into effect from July 1. According to Union Finance Minister Nirmala Seetharaman, capital gains tax will be levied at 30 per cent on profits made on investments in cryptocurrency, NFT and all other digital assets, as well as 1 per cent TDS tax levied on investments exceeding a certain level from July 1.
Although this one per cent tax levy will generate additional revenue for the state, it will be used to collect important information on who is investing in which account for the crypto investment market. This 1 per cent TDS tax will come into effect from July 1. For example, suppose a trader trades 10 transactions a day for 10 lakh rupees each. Now if the TDS is 1 per cent then they have to pay a tax of around Rs 1 lakh per 10 transactions at the rate of Rs 10,000 per transaction.
But 1 per cent tax will not be levied if the business is traded within the existing account within the trading platform. Tax will be levied only when the new is brought into the trading account. It’s almost like sending money or charging another person’s IMPS.
The federal finance minister did not say whether the 1 per cent TCS tax would hurt big investors. And this tax will affect all major investors.
