Crypto TDS: According to the leading crypto trading platform, 1 percent TDS on crypto trading is not only a loss-making deal for investors but can also reduce the tax revenue of the government.
Crypto TDS: Investor interest in crypto is increasing rapidly. In anticipation of huge revenue from its trading, the government in Budget 2022 had announced the imposition of 1 per cent TDS on transfer of all types of crypto or virtual digital assets and flat 30 per cent tax on profits made in crypto transactions. On Tuesday (8 March 2022), Union Finance Minister Nirmala Sitharaman had said that the government is exploring the possibilities of revenue in crypto.
On the other hand all the stakeholders of crypto industry including investors and traders are demanding reduction in crypto tax and TDS rate.
Now Nischal Shetty, the founder of crypto trading platform WazirX, has shown through a calculation that 1 percent TDS on crypto trading is not only a loss-making deal for investors but can also reduce the tax revenue of the government. According to Shetty, the government will have to refund a large part of the amount received as TDS as the turnover is not profit.
Here is the calculation
- Shetty showed through several tweets how 1 per cent TDS can prove to be a low revenue model for the government.
- Last year, crypto transactions of $ 10 thousand crore (Rs 7.68 lakh crore) took place in India and one percent TDS on it means $ 100 million (Rs 7684.35 crore). However, maximum part of this will be refunded as turnover is not profit.
- According to Shetty, Indians have crypto assets of about $ 300 million (Rs 23,038.80 crore).
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- If 10 percent net profit is being made on this, then income tax of $ 100 million (Rs 767.96 crore) will have to be paid at the rate of 30 percent on the profit of $ 300 million (Rs 2303.88 crore). This means that the government will have to refund $ 90 million (Rs 6911.64 crore) in TDS every year.
- However, due to this $900 million being with the government, investors will be able to trade with less money and then this will reduce their profits and the income tax to the government can be reduced.
Advocating 0.1 percent TDS
It has been shown in the above calculation that one percent TDS will reduce the trading volume, fall in profits. More TDS refund will have to be processed, there will be a huge loss of income tax received by the government. Shetty has advocated 0.1 per cent TDS instead of 1 per cent. In this situation, if investors have more capital, then trading will increase and their profits will increase, then the government will get more income tax.
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