Intentionally escaping TDS deduction may result in hefty penalties and jail provisions of up to 7 years.
Moving to international exchanges from Indian platforms can impose complicated tax compliances.
Under the tax provisions in India, inter-head crypto loss setoff is disallowed but there is no such say with intra-head loss setoff.
To deal with this challenge, leading financial experts from the crypto industry are coming forward to guide crypto investors toward the right crypto taxation.
In light of these scenarios, SunCrypto, a leading crypto exchange in India has organized “Crypto Taxes and Union Budget: A Twitter AMA” with CoinGabbar.com. This conversation revolves around taxation policy and provisions in the Union budget 2023 for cryptocurrencies. The session was attended by Umesh Kumar, co-founder, SunCrypto, Vaibhav Gupta, co-founder, TaxCryp, and CMA Sudeep Saxena, co-founder CoinGabbar and other crypto leaders to guide the investors toward effective crypto taxation.
Mr. Indy, co-founder, TaxCryp answers that as laid down in February 2022, tax liability would be 30% on all absolute gains, additionally, 1% TDS is to be levied from 1st July 2022 onwards.
There are as such no changes in the Union budget for crypto taxation. It is expected that no major taxation updates would come up in the next 12 months. Policy changes with regard to cryptocurrencies should not be expected till we have a firm crypto regulations policy.
Talking about the complications in calculating tax, he says that tax liability is evaluated on the cost-basis calculation. It deploys the first in first out method. If the transactions are in huge numbers say 10,000 or so, it becomes important to track transactions from a tax perspective or else it could drain a lot of time.
TaxCryp as a company has automated, wallets integrated software that adheres to taxation rules as prescribed by the Government Of India. TaxCryp publishes tax reports in detail so tax computation becomes an easy task.
As per CMA Sudeep Saxena, Co-Founder CoinGabbar, It is beneficial in the long term if we don’t look for short-term gains by escaping the TDS liability, shifting to international exchanges to get away from GOI to escape the tax net, which is certainly a bad move. Because in the end, GOI has a tracking hand, for them it is easy to summon data from anywhere and everywhere and once caught guilty, hefty penalties along with jail provisions from 6 months up to 7 years for TDS default have been provisioned by law.
A long legal battle may follow for trying to escape the law. This could drain away all the profit and chances are you may make a loss out of profit. Moving to international exchanges from Indian platforms to escape TDS penalties.
Coingabbar is a proud partner of leading exchange platforms of India like Suncrypto, Wazirx, and CoinDCX by providing proof of research, centralised platforms like these are transparent and well prepared for upcoming compliances and this is why users from these platforms are self-regulated and transparent enough for any government compliances.
International exchanges do not operate in a regulatory environment. So there are chances of getting trapped in compliance later. It is suggested to remain on Indian platforms that trade in tax-compliant environments. Looking at the attempts to bring consensus globally through G-20 on crypto regulations and international compliances, GOI is working on framing a regulatory framework for cryptocurrencies. We can expect a surprise(or shock) anytime soon.
Under the tax provisions in India, inter-head setoff of crypto is disallowed, which means gains and losses from different crypto assets can not be merged as one but intra-head setoff, gains, and losses from the same crypto asset can be merged and losses can setoff the gains to that extent.
The above AMA Twitter session has laid enough emphasis on being a tax-compliant crypto investor to avoid long legal procedures ahead. The discussion also insisted on trading on centralized Indian exchanges that have self-regulatory provisions. Also, it has been answered that inter-head loss setoff though disallowed, intra-head loss setoff can be availed.
Well, with the efforts government is putting towards bringing the world to a global consensus, we can expect a firm crypto regulation policy anytime soon in the future, till then happy investing!
You can listen to the recording of the AMA here.
