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Home Cryptocurrency

Rajkotupdates.news : Government may consider levying TDS TCS on cryptocurrency trading

by Tech Rexa
April 8, 2023
in Cryptocurrency
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Rajkotupdates.news : Government may consider levying TDS TCS on cryptocurrency trading
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Cryptocurrency trading is a booming activity in India, but it also faces a lot of legal uncertainty and challenges. The government of India may soon introduce a bill to regulate the crypto sector, and also impose tax deducted at source (TDS) and tax collected at source (TCS) on crypto transactions. In this post, we will explore what this means for the crypto industry and the government, and how it will affect the users and investors of crypto assets. We will also provide some information about Rajkotupdates.news a local news portal that covers various topics related to Rajkot city and its surroundings.

What are TDS and TCS?

TDS and TCS are two types of taxes that are levied under the Goods and Services Tax (GST) regime in India. TDS stands for tax deducted at source, which means that a certain percentage of tax is deducted from the payment made by a buyer to a seller, and deposited with the government. TCS stands for tax collected at source, which means that a certain percentage of tax is collected from the payment received by a seller from a buyer, and remitted to the government.

TDS and TCS are applicable to certain specified transactions or categories of persons under GST. For example, e-commerce operators have to deduct 1% TDS from the payments made to their suppliers or vendors, and deposit it with the government. Similarly, e-commerce operators have to collect 1% TCS from the payments received from their customers, and remit it to the government.

The purpose of TDS and TCS is to ensure compliance and prevent tax evasion by tracking the transactions and payments made through e-commerce platforms. The sellers or suppliers can claim credit for the TDS or TCS paid by them while filing their GST returns.

Why may the government impose TDS and TCS on crypto trading?

According to a report by The Economic Times, the government of India may consider imposing TDS and TCS on cryptocurrency trading as part of the proposed legislation to regulate the crypto sector in the country. The report cited unnamed sources who said that the government may classify crypto transactions as goods or services under GST, and levy TDS and TCS accordingly.

The report also said that the government may introduce a threshold limit for crypto transactions, below which TDS and TCS would not be applicable. This could be similar to the existing provisions for e-commerce operators under GST.

The possible reasons behind this move could be:

  • To bring crypto transactions under the tax net and generate revenue for the government.
  • To monitor and track crypto transactions and payments made through crypto exchanges and platforms.
  • To discourage illegal or fraudulent activities involving crypto assets, such as money laundering, terror financing, tax evasion, etc.
  • To create a level playing field for other sectors or industries that are subject to GST.

What are the benefits and challenges of this move?

If the government decides to impose TDS and TCS on crypto trading, it could have some benefits and challenges for both the crypto sector and the government. Some of them are:

Benefits

  • It could provide legal clarity and certainty for crypto transactions and payments in India, which are currently in a grey zone.
  • It could boost the confidence and trust of users and investors in crypto assets, as they would be assured of their tax compliance and obligations.
  • It could enhance the transparency and accountability of crypto exchanges and platforms, as they would have to maintain proper records and reports of their transactions and payments.
  • It could foster innovation and growth in the crypto sector, as it would attract more users, investors, developers, and entrepreneurs to participate in it.

Challenges

  • It could increase the compliance burden and cost for crypto exchanges and platforms, as they would have to deduct or collect tax from their customers or suppliers, and deposit or remit it to the government.
  • It could create operational difficulties and technical glitches for crypto exchanges and platforms, as they would have to integrate their systems with GST network or portal.
  • It could affect the profitability and liquidity of crypto exchanges and platforms, as they would have to pay tax upfront on their transactions or payments.
  • It could discourage some users or investors from engaging in crypto trading, as they would have to pay tax on their gains or profits.
Tags: BusinessFeaturedRajkotupdates.newsTECHNOLOGY

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