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After CoinDCX, Unocoin now demands reduction in tax and TDS on crypto

After CoinDCX, Unocoin now demands reduction in tax and TDS on crypto
Written by Arindam

Cryptocurrencies are being regulated around the world. On the one hand, while cryptocurrencies are being considered harmful to the economy in many countries of the world, on the other hand, in many countries, crypto is being given the same status as the mainstream currency. In India too, the government has taken several steps for crypto regulation but industry stalwarts do not seem to agree with the Indian government’s stand on cryptocurrencies. The representatives of the cryptocurrency market want to reduce the Tax Deduction at Source (TDS) imposed by the government on cryptocurrencies. For the year 2022-23, the government has made a provision to levy 1% TDS on cryptocurrencies in the budget. The crypto giant in India is not happy with this decision of the government, and they want to bring it down in the 0.01% to 0.05% range. The representatives of the cryptocurrency market have said that the TDS is too high, this will cause investors to start distancing themselves from the market, which is going to have a huge impact on the volumes.

Satwik Vishwanath, co-founder and CEO of Unocoin, one of India’s oldest cryptocurrency exchanges, said in a tweet, “Nowadays I am meeting traders who are quitting trading in India simply because they are paying TDS imposed by the government. In this way the government is not going to get any profit in revenue. Even for the government, it is all about volume.”

Meanwhile, there is news that the government is going to tighten the tax system related to cryptocurrency business. If the reports of last week are to be believed, the tax authority of India wants to put crypto activities under the 28% GST slab. This category is generally created for non-essential and luxury activities like betting, gambling and horse racing etc. Industry experts say that levying 1 per cent TDS is not good for retail traders. This is going to harm them.

A similar statement came out last week from CoinDCX in which the CEO of the exchange called the 1 percent TDS levied on cryptocurrencies too high. CoinDCX co-founder and CEO Sumit Gupta had said that the government is charging 30% tax on earnings from cryptocurrencies. This is too much and should be reduced.

Gupta said, “At the industry level, we are talking to the government. We have also submitted a presentation to the government in this regard. In the presentation we have explained how 30% tax on crypto income and 1 percent TDS. This is going to be detrimental to the crypto industry. It will lock up capital for traders and liquidity from the market. If there is no liquidity in the market, retail investors will suffer.”

In the budget for 2022-23, the government made a lot clear about the tax system related to crypto. The government imposed a 30% tax on profits made on crypto transactions. This tax rate is the same as applicable to luxury trading like horse racing etc.

With effect from April 1, 30 percent tax has been made on winning or similar transactions in horse racing, along with cess and surcharge. These include cryptocurrencies. In this budget, TDS of 1 percent is also proposed on transactions done on virtual currency above 10,000 within a year. The provision of TDS will be applicable from July 1. The crypto industry wants to reduce it from 1% to 0.01% – 0.05% range.

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Arindam

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