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TDS and Tax Liability and how to deduct TDS on crypto trading

Prateek Goyal (Accounts Manager) (27 Points)

24 February 2024

Respected Experts,

How to deduct TDS on cryptocurrency trading and what is the required documents for TDS filing for the same incase of TAN holder and no TAN holder. on which amount is to deduct TDS for the same. Kindly, resolve the query.

Thanks in advance

Yours Truly

Prateek Goyal

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Yasaswi Gomes new (Finance ) (4492 Points)
Replied 24 February 2024

Hello, this is Copilot, an AI companion. I can help you with some information about TDS on cryptocurrency trading in India, but please note that this is not a professional tax advice and you should consult a qualified tax consultant before making any decisions.

According to the latest updates, the Indian government has introduced a 30% tax on gains from cryptocurrency trading and a 1% TDS on the transfer of crypto assets from July 1, 2022.

The 1% TDS is applicable if the transaction value exceeds Rs 50,000 (or Rs 10,000 as applicable) in a financial year. The buyer must withhold TDS when transacting using P2P platforms or overseas exchanges. When trading one cryptocurrency for another, a TDS of 1% will be charged to both the buyer and the seller.

The TDS deducted from the crypto transactions must be deposited to the Central Government by the 7th of the next month. The buyer must also file a quarterly TDS return in Form 26QD and issue a TDS certificate in Form 16D to the seller. 3

The seller must report the income from crypto transactions as capital gains if they are held as investments, or as business income if they are held for trading purposes. The seller can claim credit for the TDS deducted by the buyer while filing their income tax return. The seller must also report the details of their crypto transactions in Schedule - Virtual Digital Assets (VDA) of the new ITR forms.

If the buyer or the seller does not have a TAN, they can use their PAN instead. However, they must still comply with the TDS rules and file the TDS returns and certificates.