Would 1% TDS on crypto in India help the crypto bears?

in LeoFinance2 months ago

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India is not El Salvador

A few months back, in November 2021 El Salvador embraced crypto.
It had its own reasons to do so.
However India is not El Salvador. The commentary in India about crypto is not exactly very friendly.
There have been numerous instances of top officials making comments that crypto is a scam and should be banned.

Perhaps it is ignorance

Ignorance it may be but it certainly is not bliss. India is facing a high inflation rate and lack of jobs for the youth.

Yet there is enormous opportunity in the blockchain universe which can create a lot many jobs and can solve so many problems that the country is facing.

Yet what we see in India is a 30% tax on crypto. In addition there is going to be a 1% TDS.

TDS stands for tax deduction at source. So if one were to buy crypto be prepared for a 1% TDS effective July 1 2022

The new tax is on transfer of crypto

As per the Central Board of Direct taxes CBDT a guideline has been issued w.r.t section 194S which has come into effect from iust day of july 2022.

By this new law 1% of TDS would be deducted on transfer of crypto and other virtual digital assets.

The exchange would be liable to deduct the tax and deposit it with the government.

"As per Section 194S, the liability to deduct tax applies only when the value or aggregate value of the consideration for transfer of VDA(Virtual Digital asset) exceeds Rs 50,000 during the financial year in case of consideration being paid by a specified person and Rs 10,000 rupees in other cases.

Clarifying how this limit of Rs 50,000 or Rs 10,000 will be calculated, the circular said: “Since the threshold of fifty thousand rupees (or ten thousand rupees) is with respect to the financial year, calculation of consideration for transfer of VDA triggering deduction under section 194S of the Act shall be counted from 1st April 2022.”"

No TDS on sum credited or paid before 1st of July 2022
Could this cause some last minute selling and further deduction in crypto prices ?
Only time could tell !

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Hello @thetimetravelerz

I wonder when the "senior officials who have commented that cryptocurrencies are a scam and should be banned", on what arguments are they basing to assure this, it is irresponsible to assure that cryptocurrencies are a scam.

Best regards, be well.

Hi @lupafilotaxia
I wish something like this could be done. However there people have plum jobs with a lot of job security. They can hardly be fired. They only retire and get replaced over time.
They just make statements to grab headlines and show their point of view right or wrong hardly matters to them.
It it like who holds the stick holds the power and right and wrong hardly matters.

I think it has a lot to do with age as well. Younger politicians, such as Bukele of El Salvador, who's around 40, gets it, and sees the future. Older politicians are set in their ways are less likely to embrace a burgeoning new technology, especially if it threatens their old paradigm.

Perhaps you are right about the correlation of age and the view of thinking. However looking at the financial challenges of the fiat world and the blockchain opportunities hope better sense prevails.
Thanks @brennanhm