Introduction
Rajkotupdates.News : Government May Consider Levying Tds Tcs On Cryptocurrency Trading Cryptocurrencies are digital or virtual currencies that use cryptography for security and operate independently of central banks. Bitcoin, Ethereum, Ripple and Lite Coin are some of the popular cryptocurrencies in the market. While some countries have adopted them fully, others, including India, have taken a cautious approach.
Cryptocurrency: In the upcoming budget, the government may consider imposing TDS/TCS on the sale and purchase of cryptocurrencies above a certain limit, and such transactions should be brought under the ambit of specific transactions to report to income tax authorities, said Arvind Srivatsan of the Tax Department. Leader and Partner, Nangia Anderson LLP.
Rajkotupdates.News : Government May Consider Levying Tds Tcs On Cryptocurrency Trading
The government may consider charging TDS/TCS on sales and purchases of cryptocurrencies above a certain threshold in the next budget, and these transactions should be included in the scope of specified transactions for reporting purposes to authorities. tax, Nangia Andersen LLP Tax Leader Aravind, says Srivatsan.
Also, a higher tax rate of 30% should be levied on income from cryptocurrency sales, similar to winnings from lotteries, game shows, puzzles, etc. he said.
Speaking to PTI on what the Budget 2022-23, to be unveiled by the government on February 1, could have in store for the crypto industry in India, Srivatsan said currently, India has the highest number of crypto owners globally, at 10.07 crore and as per a report it is to be expected that the investment by Indians in cryptocurrency could touch USD 241 million by 2030.
What Is The Difference Between TDS and TCS?
Income tax is one of the most important aspects of financial planning. You need to track your income and investments and plan strategically to purchase life insurance, term plans, or any other tax-saving investment.
Income tax is not the only source of state taxation. It also collects indirect taxes such as TDS, TCS and GST from us by imposing them on goods, services and transactions. With direct taxes, payments are made by those who earn money. In the case of indirect taxes, the onus is on the seller to file the tax with the government.
Two commonly confused indirect taxes are the TDS and the TCS. Let’s find out what they are.
TDS and TCS
Taxes withheld at source and taxes collected at source are both accounted for at the head of income.
- The TDS is the tax that deduct from a payment made by a company to an individual if the amount exceeds a certain ceiling. TCS the tax charged by sellers when they sell something to buyers.
- The TDS deduction applies to payments such as salaries, rents, professional fees, brokerage fees, commissions, etc. The TCS deduction applies to sales of goods such as timber, scrap metal, mineral timber, etc.
- TDS only applies to payments over a certain amount. The T&Cs apply to the sale of certain goods that do not include any production or manufacturing equipment.
Tax deducted at source and tax collected at source – examples
Suppose Mr X works in a company. His company deducts tax from his monthly salary at the applicable rate before making his final payment. The amount thus deducted is TDS.
Today, Mr Y is a mineral wood merchant. He sells mineral wood to Mr Z. During the sale, Mr Y collects a tax of 5%; this amount that Mr Y receives from the customer is call TCS.
Major Impact on Inverters
The proposed TDS and TCS on cryptocurrency trading will significantly impact traders and investors in India. Firstly, it will increase the tax compliance burden on them, as they will now have to account for taxes on their cryptocurrency income.
Additionally, it may deter new traders and investors from entering the market due to the additional tax burden. However, it may also bring more legitimacy to the market, as it will be subject to the same tax laws as other investments.
The imposition of TDS and TCS on cryptocurrency trading in India will increase the tax compliance burden on traders and investors. They now have to account for taxes on their cryptocurrency income. Additionally, it may deter new traders and investors from entering the market due to the additional tax burden. However, it may also bring more legitimacy to the market, as it will be subject to the same tax laws as other investments.
Problems During Implementation
The implementation of TDS and TCS on cryptocurrency trading in India will not be without challenges. The biggest challenge will be identifying the source of income for these transactions, as cryptocurrencies are not issue by any centralize authority. Additionally, cryptocurrency exchanges are currently not regulate in India, making it difficult for the government to effectively monitor and regulate them.
It will be a challenge for the management to identify the source of income for cryptocurrency transactions as cryptocurrency not issue by any centralized authority. However, it may be possible to track transactions through exchanges and wallets.
Future of Digital Currency
The government’s proposed move to levy TDS and TCS on cryptocurrency trading could be a step towards accepting them as a valid form of currency. However, it is still unclear how the government plans to regulate cryptocurrency exchanges and trading in the future. The government may also explore the possibility of launching its digital currency in the future.
Conclusion
Rajkotupdates.News : Government May Consider Levying Tds Tcs On Cryptocurrency Trading: The Indian government’s proposed move to impose TDS and TCS on cryptocurrency trading is a significant development in the country’s approach towards cryptocurrencies. While this may increase the tax compliance burden on traders and investors, it may also bring more legitimacy to the market.