The 1% TDS Issue

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Yesterday our Finance Minister of India announced the Budget for 2022 in the Indian Parliament and I have to say the announcement of Crypto Taxation certainly took a huge chunk of attention for a lot of guys. I covered the Tax Bracket which is 30% on yesterday's post and how I feel about that so please read about it in this post. But today I wanna talk about one more aspect of Crypto taxation which was the 1% TDS Charge that was also Introduced in the Parliament.

TDS means Tax Deducted at Source and in this case 1% TDS means that whenever you deposit certain FIAT funds into a Crypto Exchange Wallet they will deduct 1% of that amount and then deposit that amount as Tax Paid to the Government in your Name. If you are wondering how an Exchange is going to pay Taxes in your Name then let me remind you that they have your PAN Card Details as KYC so they can deposit Tax on your PAN Card Details and that will count as Tax paid by the Exchange on behalf of you. Now there is one good thing about this and one not-so-good thing about this.

First of all, if you deposit 10000 INR then immediately you will lose 100 INR as TDS which will be deducted by the Exchange and that is obviously something not a lot of guys will be fond of. But at the same time, that same 100 INR will be deposited as Tax paid by you for that Financial Year which means you can Claim that Tax Amount while Filing your Income Tax Return.
This way the Government will also be able to track how much an Individual has Invested into Crypto via Exchanges and will have a detailed report by the end of the Financial Year.

If you ask me I see this as a good thing as you are paying some amount of Tax to the Government in Advance and that way you can focus on Investing in Crypto Rather than worrying about what you will do for the 30% Tax that you have to pay by the end of the year cause chances are that a big chunk of that tax that you would owe to the Government will have already been paid off due to TDS.