Crypto traders failing to pay TDS over crypto trade will be subject to financial crime & may face upto 7 years of jail punishment in addition to a fine equal to TDS.
India is a tech-adaptive country and there is a very big room for blockchain technology adoption but Crypto is still in a dark light, where crypto traders are struggling to get regulatory clarity on Crypto trading. To this date, Crypto investment is subject to 30% tax & 1% TDS but there is no regulatory framework to regulate the Crypto companies. In short, the Indian government is making a profit from the crypto sector but not doing anything in favour of the crypto sector.
Just a couple of days ago, Indian finance minister Nirmala Sitaraman announced Budget 2023, where reportedly she also dragged Crypto investors under a new rule.
On 1 Feb 2023, A Crypto Twitter user & emerging Crypto influencer in India, Kashif Raza, shared three main points that were covered in the Budget 2023 session.
Raza noted that if any person fails to pay TDS then that person will face a fine equal to the total amount of TDS that should be paid by that crypto Investor.
Secondly, that person may face the punishment of jail for 3 months to upto 7 years.
And the people who fail to pay TDS on time then that person will be forced to pay 15% interest per annum, which will be regardless of the profit or loss in corresponding trades.
TDS, Crypto exchanges & confusion
The majority of the Crypto traders in the Indian crypto community are not able to figure out to understand this situation because it is not easy to keep a record of every crypto transaction.
To this date, the majority of the Indian Crypto exchanges introduced the TDS system & Crypto tax tool but this situation is not the same in the case of P2P crypto trade platforms & foreign crypto exchanges because they are outside of such features.
Because of the very low trade volume on the Indian crypto exchanges, the majority of the crypto traders prefer to use the Binance exchange as the best crypto marketplace to buy & sell assets but there is no inbuilt feature for auto TDS & Crypto tax calculation.
Note: TDS is an advance tax payment system, to prohibit tax payers from invading the tax system.