Hi Flitpay FAM!
As you know, the Central Board of Direct Taxes (CBDT) has mandated a deduction of 1% TDS on the transfer of crypto and other virtual digital assets from July 1, 2022.
So, let’s understand these guidelines through a Q/A format.
- Will TDS deduct on Crypto-INR pairs?
TDS will not deduct for buying crypto from INR, but when you sell your cryptos for INR, 1% of your total amount will get deducted as TDS.
For example, if you buy 1 BTC from INR, no TDS will be deducted in the process. But if you sell your BTC for 100 INR, 1% of it i.e; Rs1 will be deducted as TDS, and you will get Rs99.
- Will TDS deduct on crypto to crypto transactions ?
Yes, 1% TDS will deduct on both buy & sell C2C transactions.
For example, if you exchange your BTC with USDT, 1% TDS will be deducted from your exchanged BTC and you will receive your USDT after its 1% deduction.
- Will TDS deduct if you deposit money into your Flitpay wallet?
No, TDS will not deduct when you deposit money in your Flitpay wallet.
- Will TDS be deducted if you sell your crypto at a loss?
Yes, TDS deduction is compulsory for every sell order of crypto assets regardless of the loss or profit for the seller.
- Who will deduct this TDS?
As per the CBDT guidelines, the Exchange itself, in your case, Flitpay will deduct the TDS from users on behalf of the government. You can claim this TDS amount back at the end of this financial year.
- Will TDS be applied on payments made before July 1?
As per the latest guidelines, the selling of crypto assets before 1st July 2022 would not be applicable for the tax deduction.
- Will TDS also deduct for staking your crypto assets?
No, there will be no TDS deduction for staking your crypto assets. You can easily buy and stake it anytime to earn interest without worrying about TDS deduction.
- Is this 1% TDS compulsory?
Yes, as per revised Income Tax regulations, this TDS deduction is mandatory for all the sell transactions of crypto assets. These crypto tax measures declared by the Indian Government are compulsory, and it is unlawful if you do not follow them.
- How to reclaim the deducted TDS amount?
The Exchange, for example, Flitpay will deduct 1% on behalf of the seller and deposit it to the government. You can reclaim this amount as a refund while filing your ITR for this financial year.
- TDS will be applicable in which cases?
TDS will be deducted in the following cases:
-When you SELL a crypto in INR
-When you BUY or SELL in any other crypto pairs.
This means if you sell any crypto asset at INR “X” after 1 July 2022, 1% of these INR X will be deducted as TDS, and you will get 99% of X in your wallet.
In context to crypto pair 1% TDS will be deducted on both the crypto.
- Will TDS deduct every time if I sell multiple orders in a day?
Yes, TDS deduction is mandatory for every INR sell order of virtual digital assets. For example, if you sell a cryptocurrency “A” 3 times in a day and sell another cryptocurrency “B” 2 times in a day, TDS will deduct all five times when you sell these crypto orders.
Similar will be the case with C2C buy and sell orders.
1% TDS will be deducted on the net value after the deduction of Trading fees.
For instance: If you placed an order to sell BTC of INR 30000. 1% TDS will be deducted on the net value after the deduction of 0.2% of trading fees i.e. on the value 30000-60= 29940
TDS deducted will be = 29940*1%