RajkotUpdates.News has recently reported that the Indian government is considering levying TDS/TCS on cryptocurrency trading. This move is aimed at regulating the cryptocurrency market and curbing its potential misuse. In this blog post, we will explore what TDS/TCS is, the current status of cryptocurrency in India, and the possible implications of levying TDS/TCS on cryptocurrency trading.
What is TDS/TCS?
TDS stands for Tax Deducted at Source, while TCS stands for Tax Collected at Source. These are mechanisms used by the government to collect taxes from various sources of income. TDS is deducted from the income of the recipient, while TCS is collected by the seller from the buyer at the time of sale. TDS/TCS is applicable to various types of transactions, such as salary, interest, rent, and more..
The Current Status of Cryptocurrency in India Cryptocurrency
is a digital or virtual currency that uses cryptography for security. In India, the status of cryptocurrency is still unclear. In 2018, the Reserve Bank of India (RBI) issued a circular that prohibited banks and other financial institutions from dealing with cryptocurrency exchanges. This move made it difficult for cryptocurrency traders to withdraw or deposit funds in their bank accounts. However, in March 2020, the Supreme Court of India quashed the RBI circular, stating that it was unconstitutional. This decision provided a boost to the cryptocurrency industry in India.
Since then, the government has been working on a bill to regulate cryptocurrency in the country. The bill proposes to ban all private cryptocurrencies in India & create a framework for the development of a central bank digital currency (CBDC). The bill is currently under review by the government.
The Possible Implications of Levying TDS/TCS on Cryptocurrency
Trading If the government decides to levy TDS/TCS on cryptocurrency trading, it could have several implications. Firstly, it could increase the compliance burden on cryptocurrency traders. They would have to deduct or collect taxes at source and file tax returns accordingly. This could result in an increase in the cost of trading and may deter new investors from entering the market.
Secondly, it could bring more transparency to the cryptocurrency market. Since TDS/TCS would be deducted or collected at source, the government would have more.. information about the transactions taking place in the market. This could help in curbing the potential misuse of cryptocurrency for illegal activities such as money laundering and terrorism financing.
Lastly, levying TDS/TCS on cryptocurrency trading could also be seen as a step towards legitimizing the cryptocurrency market in India. It would bring cryptocurrency trading on par with other types of investments such as stocks & mutual funds, which are subject to TDS/TCS.
The Indian government’s move to consider levying TDS/TCS on cryptocurrency trading is aimed at regulating the market and curbing its potential misuse. While it could increase the compliance burden on traders, it could also.. bring more transparency to the market and legitimize it as an investment option. The bill to regulate cryptocurrency in India is still under review, and it remains to be seen how the government will address this issue in the future. In the meantime, cryptocurrency traders in India should stay informed about any updates and comply with the existing regulations to avoid any legal issues.