As India’s fiscal policies approach the April 1 effective date, a Bahujan Samaj Party (BSP) MP, Ritesh Pandey, has expressed his concerns in the Lok Sabha. Pandey said the 1% withholding tax (TDS) will promote the “red carpet” while killing this booming digital asset class. The “red carpet” idiom refers to these supposedly excessive and rigid formal rules. Pandey’s comments come against the backdrop of an outcry from the Indian crypto community, which is calling on the government to reconsider the tax regime it is pushing the crypto industry into.
“When you impose 1% TDS in three steps, it will give rise to a red carpet. It will also end this asset class, which is very young,” the BSP executive said.
This 1% TDS on crypto transactions, Pandey explained, will require a person to pay TDS in three stages – when a cryptocurrency is purchased, when it is transferred to a crypto wallet, and when the cryptocurrency is used to purchase another digital asset, such as a non-fungible token (NFT).
In recent times, famous Indian celebrities like Amitabh Bachchan and Salman Khan have launched NFTs linked to their identities. Bollywood movies such as ’83 have also released NFTs.
The BSP leader said that collectors wishing to hold digital assets of these popular NFT series will have to spend a lot due to the taxes levied.
A video clip of Pandey’s tax law speech was widely shared on social media.
India’s Finance Minister, Nirmala Sitharaman, however, argued that this TDS is only for transaction tracking.
“The TDS (tax withheld at source) is more for monitoring. This is not an additional tax or a new tax. It is a tax that will help people track it, but at the same time the taxpayer can still reconcile it with the total tax to be paid to the government,” Sitharaman had said earlier.
The crypto industry in India is preparing for regulatory laws that will come into effect from April 1.
Industry insiders, however, are concerned that the 30% tax on revenue generated from crypto itself will not directly benefit the Indian community.
“The addition of cryptocurrency under GST on top of crypto tax and TDS is sure to put more pressure on the crypto community. In a bid to push a decentralized financial system for the better , that might challenge the real purpose of it. The GST board needs to take serious note on this,” Om Malviya, President of Tezos India told Gadgets 360.
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