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India's 1% TDS on crypto transfers brings in $19 million in 9 months
Indian tax authorities collected Rs 158 crore (about $19 million) in TDS for virtual digital asset transfer (VDA) till March 20, Minister of State for Finance Pankaj Chaudhary told Parliament on Tuesday. Since the financial year ended on March 31, this can be considered as the final figure for the entire 2022-23 financial year. 1% TDS at a threshold of $125 The Indian government has brought crypto transactions under a new tax regime through the Budget 2022-23. It provided 1% TDS for VDA transfers exceeding Rs 10,000 (about $125) in a financial year. In addition, all profits from VDA transfers...
India's 1% TDS on crypto transfers brings in $19 million in 9 months
Indian tax authorities collected Rs 158 crore (about $19 million) in TDS for virtual digital asset transfer (VDA) till March 20, Minister of State for Finance Pankaj Chaudhary told Parliament on Tuesday.
Since the financial year ended on March 31, this can be considered as the final figure for the entire 2022-23 financial year.
1% TDS with a threshold of $125
The Indian government has brought crypto transactions under a new tax regime through the budget for 2022-23. It provided 1% TDS for VDA transfers exceeding Rs 10,000 (about $125) in a financial year. In addition, all profits from VDA transfers were subject to a 30% income tax.
The 1% TDS was deducted from July 1, 2023. In November, the minister told the Indian Parliament that TDS collection on VDAs from July 1 to November 1 was Rs 60.46 billion ($7.4 million). Given the low tax revenue, it was expected that the government would relax the tax rate, bringing it to between 0.05% and 0.1% in line with industry demand. But authorities provided no such relief.
Regulatory vacuum
Subsequently, crypto transactions were brought under the Prevention of Money Laundering Act (PMLA). Industry representatives surprisingly welcomed the decision as bringing some sort of clarity, a break from a complete regulatory vacuum.
Due to high taxes and a hostile regulatory environment, India, which had a burgeoning crypto ecosystem, began ceding the advantage to neighboring and friendlier jurisdictions such as the United Arab Emirates and Singapore.
According to a Nasscom study, 60% of India's 450 Web 3 startups are registered outside the country. The report also highlighted that India is well positioned to drive Web 3 transformation thanks to its large talent pool, which accounts for 11% of the global market.
Crypto acceptance is growing
According to the latest Statista data, India has 150 million crypto users. By the end of 2023, India's crypto adoption rate could be higher than the UK and US, and 11% of locals will have experimented with digital asset transactions.
India hosted the meeting of G20 finance ministers and central bank governors last month, where discussion of crypto regulations featured prominently. And it appears that the powerful economic bloc will have introduced some sort of regulation for the cryptocurrency sector by the end of 2023.
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