In this article, we are going to know What Is TDS On Cryptocurrency In India. Finance Minister Nirmala Sitharaman introduced section 194S to impose TDS on the transfer of cryptocurrency and Virtual Digital Assets(VDA) and also non-fungible tokens under budget 2022. This section was imposed just to trace the transaction of cryptocurrency, NFT, and Virtual Digital Assets(VDA). In this, the government introduced a deduction of TDS at 1% in case of transfer of Virtual Digital Assets(VDA), if the total value exceeds 10,000 INR during the financial year 2022.

Under the budget 2022, the government also introduced the provision for the tax on cryptocurrency NFT and Virtual Digital Assets(VDA) at the rate of 30% under section 115 BBH.

Read till the end, you’ll get to know more about What TDS On Cryptocurrency In India. What is a Virtual Digital Assets? When to deduct TDS under section 194S? and many more.

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What is a Virtual Digital Assets?

Easily Virtual Digital Assets(VDA) are cryptocurrencies, non-fungible tokens, and other decentralized Finance are the perfect example of Virtual Digital Assets(VDA). The term Virtual Digital Assets(VDA) comes after the newly inserted section 2(47A).

When and How much deduct TDS under section 194S TDS on Cryptocurrency?

• Individuals should be residents of India.
• If the person transfers any Virtual Digital Assets(VDA) exceeding the threshold limit of INR 50,000 for a specific person during the financial year or INR 10,000 these threshold limits in case of other people, then the TDS should be deducted.
• The Rate of Interest for TDS under section 194S is 1% of the Transfer amount at the time of payment for the transfer of cryptocurrency or NFT or other virtual digital assets.
• After introducing section 194S the payer has to deposit the TDS with the government before making the payment.

The Indian government introduced new Crypto tax penalties.

In the budget speech of 2023, Finance Minister Nirmala Sitharaman did not mention cryptocurrency in her budget speech. However, in the finance bill, the Finance Minister reportedly included an amendment to the income tax act that applies to the cryptocurrency TDS.

According to the Crypto tax firm koinX if any person fails to deduct Crypto TDS then the person has to pay the unpaid TDS with 15% interest per annum will be imposed as a late payment also failure to TDS on cryptocurrency transaction can lead to a person’s in jail for up to 7 years.

10 countries for tax-free Crypto trading in 2023

The number of cryptocurrency users is increasing day by day. For the last few years, individuals have diversifying their portfolios just to create high returns in a short period. Many governments started imposing taxes on cryptocurrency because of the increase in the number of Crypto investors and growth in the crypto industry. But few countries offer tax-free for Crypto investors and traders that help investors and traders to generate high returns. 

The countries for tax-free crypto trading in 2023 are:

• Thailand 
• Switzerland 
• Hong Kong 
• Germany 
• Singapore 
• Malta
• Monaco 
• Vanuatu 
• Seychelles
• Puerto Rico

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Conclusion:

Finance Minister Nirmala Sitharaman introduced section 194S to impose TDS on cryptocurrency or other virtual digital assets in budget 2022. This section was imposed just to track the transaction of cryptocurrency and other VDAs. In this section, the government deducts TDS at 1% if the transaction of Virtual Digital Assets(VDA) is above INR10000.

In budget 2023, Finance Minister Nirmala Sitharaman did not mention anything about the Crypto Industry and VDA. But if the person fails to deduct TDS, then the person has to pay a 15%interest rate on the unpaid TDS per Annum as a late payment and the person can be in jail for up to 7 years.

Frequently Asked Questions:

How is cryptocurrency taxed in India?

In budget 2022, section 115BBH was introduced, which means crypto traders have to pay a 30% tax on profits made from crypto trading plus also surcharge and 4% CESS.

Is WazirX deducting TDS?

If any Indian user makes a transaction of cryptocurrency on the WazirX exchange, then WazirX is liable to deduct TDS on the user’s behalf.