Money & Banking
Surabhi | Mumbai, June 7 |
But worried about impact on trading
Cryptocurrency exchanges are readying their systems for the one per cent tax deducted at source that will kick in from next month.
Exchanges said they are awaiting more clarity from the government on the mechanism for collecting the tax and various aspects of the TDS. Concerns remain rife that investor sentiment, which is already muted, will be hit further once the tax comes into play on July 1.
The tax department is understood to have held a series of meetings with crypto exchanges on the roll out of the tax in the last few weeks.
“We’ve had numerous meetings with different government departments. We are waiting for more clarification on the mechanism for collecting the TDS. Our TDS module is in place. The moment the government gives us the mechanism, we will implement it, “said Rajagopal Menon, Vice-President, WazirX.
‘Clarity on some issues needed’
Menon said the exchange is also working on a revamped P&L statement that will help investors understand their P&L better. Collecting the TDS is just one part of this, he added.
Saathvik Vishwanath, CEO, Unocoin also said the exchange is preparing its systems for the new tax proposal.
“The one per cent TDS will be levied from either July 1 or July 15. Based on the current guidelines, we are working on the mechanism for deducting the tax. We have put forward a few questions to the government for more clarity on the tax deduction, “he said.
For example, when someone is buying crypto assets and the exchange is the seller, then the buyer has to hold the one per cent TDS, he said, adding that this may be a little unrealistic.
Similarly, if the buyer and seller are connected through the exchange, the buyer would not know the seller directly and would still have to hold the TDS.
“If we get clarity on these issues, it will be easier for our systems and processes,” said Vishwanath
Exchanges said they are getting a flurry of questions from customers as well on the modalities of the tax.
“There continue to be questions about whether the TDS is applicable and, if so, at what rate. Clearly, our request for a lower rate of TDS has not been accepted,” noted another crypto player, adding that there are concerns about how the new tax will impact sentiments.
Menon of WazirX said the tax will impact different segments of traders differently.
“The volatility of the crypto market makes it normal for people to trade. Younger investors might like to trade, but slightly more mature investors prefer to invest,” he said.
He however, said there is a lot of worry about the TDS.
“Trading volumes are already 50 to 60 per cent down. We wonder what will happen from July 1. Markets are also globally depressed,” he said.
The Union Budget 2022-23 has proposed a taxation scheme for virtual digital assets which includes a one per cent TDS on payments made in relation to transfer of such assets.