Impact of 1% TDS on all Crypto trades

07 Feb 2022

They say the devil is in the details. I missed the 1% TDS on all Crypto trades, similar to the TCS of 0.1% on Gold. I assumed that the TDS is only on the gains. With this 1% TDS, I think Crypto volumes in India will drop off the cliff come July 1st 2022 when it is implemented.

A 1% TDS means 1% of every trade value is blocked by the platform. So in 50 trades, 50% of the account value can be blocked for TDS regardless of the P&L. Volumes are bound to drop and spreads can widen significantly. This will end up creating a snowball effect.

Of course, if there are no profits, TDS will be refunded once the income tax returns are filed. But traders would need to declare crypto income. With all the crypto celebration post-budget, reminds me of the saying, “Saanp bhi Mar jaye aur lathi bhi na toote”.

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