From the desk

TDS on crypto trading

Yash Chavan

• 2 min read
TDS on crypto trading

As per the Finance Act of 2022, from 1st July 2022, the sale of Virtual Digital Assets (VDAs) will be subject to Tax Deduction at Source (TDS) of 1%.

Defy will be required to deduct this tax during trade execution and then file TDS returns with the income tax authorities. The TDS can be adjusted against your overall tax liability at the time of filing your annual income tax returns.

To ensure a smooth investing experience for you and to remain compliant with the tax laws, you as a user need not perform any extra steps while transacting on Defy. Defy will do the needful.

Here’s how the TDS will apply in each of Defy’s product features:

TDS is not applicable on the following:

  • Depositing INR on Defy
  • Withdrawing INR from Defy
  • Buying crypto with INR
  • Investing in Basket with INR
  • Depositing crypto on Defy
  • Withdrawing crypto from Defy

TDS is applicable on the following:

  • Selling crypto for INR
  • Withdrawing INR from Basket

As per the Finance Act 2022, your transactions will not be subject to TDS if your total trade value doesn’t exceed INR 10,000 in the said financial year (2022-23).

As Defy does not have any records of your trades outside Defy, we will be deducting TDS on every transaction as mentioned above. You can claim the deducted amount at the time of filing your Income Tax Return.

How much TDS will be charged?

  • 1% if the user has filed Income Tax Returns
  • 5% if the user has not filed their Income Tax Return for the last 2 years and the amount of TDS is 50,000 INR or above for each of these 2 previous years, as per Section 206AB

Here’s a quick example for you to understand the calculation:

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Official resources for your reference:

Finance Bill 2022 : https://www.indiabudget.gov.in/doc/Finance_Bill.pdf

Central Board of Direct Taxes, Circular No. 13 of 2022 : https://www.incometaxindia.gov.in/communications/circular/circular-no-13-2022.pdf

Income Tax website : https://www.incometaxindia.gov.in/Pages/default.aspx

For all your TDS related queries, click on FAQs.

If you still have any questions, feel free to contact us at support@defy.club

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