Indian cryptocurrency players will have to comply with a government order for a 1% tax deducted at source (TDS) on all cryptocurrency and non fungible token (NFT) transactions, starting today.
What Happened: The law, which the Prime Minister Narendra Modi-led government introduced during the Union Budget in February, will be effective from July 1 (Friday) for transactions of more than 10,000 rupees ($126).
The Central Board of Direct Taxes (CBDT) under the Indian Ministry of Finance said the tax will be deducted when the sum gets credited to the resident’s account or at the time of payment, whichever is earlier.
On April 1, the government introduced a 30% tax on all profits earned from cryptocurrency trading.
How Crypto TDS Will Be Done
Peer-To-Peer Transaction: In a peer-to-peer transaction, with no broker or exchange involved, the buyer will be required to deduct the TDS under the given section, which will then have to be deposited with the government under relevant provisions of income tax rules.
Broker Or Exchange Transactions: When an investor transfers virtual digital assets (VDA) such as Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), and Dogecoin (CRYPTO: DOGE) through an exchange or a broker, the tax may only be deducted by the exchange which is crediting or making payment to the seller.
For NFTs, Other VDAs: If an exchange owns VDA, the buyer or his broker is primarily responsible for deducting the TDS. However, the parties may enter a written agreement to pay the tax for all such transactions.
For Crypto To Crypto Transactions: In these transactions, the TDS must be deducted in cryptocurrency alone. The government notification said the cryptocurrency would be required to be converted into Indian rupees by 11.59 PM on the same day.
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