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TDS on Crypto Trades

작성자 와지르엑스 조회수 404 작성일 22.06.22  14:35
  1. From July 1st, 2022 onwards, TDS would be deducted on each trade where a crypto asset is exchanged for INR or another crypto asset.
  2. No TDS would be deducted from the buyer on buying Crypto using INR, while the seller of the crypto asset would be liable to pay TDS. However, when a crypto asset is bought by paying with another crypto asset, i.e trading one crypto asset for another, the TDS would be payable by both sides. 
  3. Wherever applicable, 1% TDS would be deducted from the receivable INR or Crypto amount. However, if the user is eligible for TDS deduction at a higher rate under section 206AB, the rate of TDS would be 5%. For simplicity, in the rest of this document we’ll use 1% as the rate of TDS.
  4. As the TDS collected needs to be paid to the Income Tax Department in the form of INR. Any TDS collected in the form of crypto has to be converted to INR. For ease of conversion and to reduce price slippage, in crypto to crypto transactions, the TDS for both the sides would be deducted in the form of quote (or primary) crypto asset. WazirX markets have 4 quote assets- INR, USDT, BTC and WRX. For e.g, in following markets Matic-BTC, ETH-BTC and ADA-BTC, BTC is the quote crypto asset, and hence the TDS of both the buyer and seller trading in these markets would be deducted in BTC

Examples- 

  1. INR markets: 1 BTC traded for 100 INR. BTC seller receives 99 INR (after 1% TDS deduction). BTC buyer receives 1 BTC (no TDS deducted)
  2. Crypto-Crypto markets: 1 BTC sold for 10 ETH. BTC seller receives 10 ETH by paying 1.01 BTC (after 1% TDS addition). BTC buyer receives 0.99 BTC (after 1% TDS deduction)
  3. In P2P trades. 1% TDS would be deducted before a USDT sell order is placed. No TDS paid by the P2P USDT buyer.
  4. Seller places an order for selling 100 USDT. Post 1% TDS deduction, a sell order would be placed for 99 USDT. The buyer would pay for 99 USDT and the corresponding INR would be transferred to the seller's bank account by the buyer.
  5. If the entire 99 USDT is not successfully sold. 1% TDS would be deducted only in proportion to the amount sold and the remaining of the 1 USDT locked for TDS would be released back to the seller on order cancellation.
  6. Any TDS collected in crypto would be periodically converted into INR, and the INR value received would be updated against the respective trades
  7. Traders can see the INR value of the TDS collected by WazirX in the trading report after 48hrs of the trade execution
  8. This TDS amount can be claimed or adjusted against total tax liability by the traders at the time of ITR filing for the financial year.
  9. For consistency and simplicity of implementation, the above described approach of taxing crypto trades would be applicable for all users irrespective of their trading volume during the financial year. As explained in point 6 above, all the tax deducted can be claimed by the user while filing ITR.
  10. TDS would not be applicable on the trades performed on WazirX by a broker platform if the broker is deducting the TDS itself and it has an appropriate written agreement with WazirX specifying the same.
  11. As more details on multiple aspects of crypto taxation are still awaited. we will update our implementation accordingly and also keep the users informed about any such changes. 

 

Important- This report / document has been prepared by WazirX and is meant for sole use by the recipient and not for circulation. The report / document and information contained herein is strictly confidential and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of Wazir. The report / document is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guarantee, representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions mentioned in this report/ document are subject to change without notice. The report is prepared solely for informational purposes and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for any financial instruments or products or any kind of  advice including but not limited to investment advice / tax advice or any kind of interpretation of regulatory directives.




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