Unwinding the 1% Crypto TDS

Breaking it down

  • Profits from cryptocurrencies, including NFT sales and mining incentives, are subject to a 30% tax.
  • Cryptocurrency Gifts are subject to a 30% tax.

What is TDS?

Do I need to pay TDS for any amount traded?

Which trades will be eligible for 1% TDS?

  • Spot market sell (INR and Non — INR pairs)
  • Example: BTC/INR, ETH/INR
  • Spot market buy (Non-INR pairs/ Crypto to Crypto Pairs)
  • Example: BTC/USDT, BTC/USDC

How is the TDS calculated for Spot Market trades? Explained with an Example

  • Assume that on July 1, 2022, you get Rs 1 lakh, and you decide to invest in bitcoin.
  • On August 1, your portfolio value drops to Rs 50,000.
  • You consider cashing out with a loss of Rs 50,000 to avoid further losses.
  • After a 1% tax is deducted at the source, you get Rs 49,500 instead of Rs 50,000.
  • Now, you decide to put Rs 49,500 into Ethereum on August 1.
  • On March 1, 2023, the price of Ethereum rises to Rs 80,000. You sell again and get Rs 79,200 after TDS.
  • You don’t buy any more cryptocurrency on March 1.
  • You lost Rs 50,000 on Bitcoin and have to pay TDS of Rs 500.
  • You made Rs 30,500 from Ethereum and paid Rs 305 in TDS.
  • Your total tax liability at the end of the financial year will be 30% of Rs 30,500 which equates to Rs 9150.
  • You paid Rs 1,305 in TDS altogether for the financial year.
  • The remainder would be paid at the time of filing taxes.

Can we offset losses on one Crypto with profit from another?

Will TDS be calculated based on the Net amount or the Gross amount of the trade?

5% TDS for those who fail to file Income Tax

Will a 30% Crypto Tax be added on top of TDS?

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