Crypto TDS (tax) rules come into place: Four changes to note from today

The rules regarding tax deducted at source (TDS) on virtual digital assets have come into effect starting July 1. This comes after the government levied a 30 per cent flat income tax on cryptocurrencies from April 1. During this time, the government also announced the imposition of a TDS of 1 per cent. However, traders and exchanges were under the confusion about whom the onus of deduction would lie.

On June 22, the Central Board of Direct Taxes (CBDT) issued detailed guidelines on crypto assets and clarified the various scenarios under which tax would be applicable. A TDS would be levied on the transfer of virtual digital assets effective July 1 if the value of transactions exceeds Rs 10,000 in a year. To help you understand these provisions better, here we explain crypto TDS rules in four-pointers.

Applicable from July 1
TDS provisions are applicable from July 1, 2022. This means any trades executed before July 1 won’t lie under the onus of dedications. It should be noted that if you have placed orders before July 1 2022, but the trade happens on or after the 1st of July 2022, the TDS provisions will still apply. For instance, say you bought Rs 10,000 worth of Bitcoin in June but processed the trade after June 30 then TDS would still be levied. As per the provisions, TDS would be deducted on each trade where a crypto asset is exchanged for INR or for another crypto asset.