The term ‘red tape’ refers to rules that are too stringent and people have to face difficulties. “When you levy TDS of one per cent in three phases, it will lead to red tape. By doing so digital assets will also suffer,” Pandey said. He said that TDS of one percent on crypto transactions will be paid in three phases, on buying cryptocurrency, transferring it to a crypto wallet and using the cryptocurrency to buy any other digital asset like Non-Fungible Token (NFT) . In recent months, some celebrities and movies have also launched NFTs.
He said that collectors who buy digital assets from the popular NFT series will have to pay more on account of tax. However, Finance Minister Nirmala Sitharaman says that TDS has been levied for the purpose of tracking the transactions. “It is not an additional tax and not a new tax. It will help in tracking,” he had said.
In the budget, it was proposed to levy 1 percent TDS for cryptocurrencies on payments exceeding Rs 10,000 in a year and tax on the recipient of such gift. The limit for TDS will be Rs 50,000 in a year for people falling in the special category. These include individuals/Hindu Undivided Families (HUFs) who will have to get their accounts audited under the Income Tax Act. No deduction of expenditure or allowance shall be allowed for computing the income from transactions in such assets. It has also been clarified that the loss arising from transfer of Virtual Digital Assets will not be allowed to be set off against any other income.
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