Taxman’s lens on interest from cryptos in foreign platforms
According to two persons acquainted with the situation, Indians collecting “interest” on their bitcoins from platforms outside India are being investigated by the taxman.
According to them, the tax administration is considering imposing a TDS and equalization levy on such transactions and interest income earned by Indians.
The government is considering imposing a 20% TDS on these transactions, particularly when one of the parties to the contract has failed to submit a tax return.
The government has imposed a 30% tax on income or returns from virtual digital assets. TDS of 1% will be applied to all transactions starting in April of this year.
The administration is also looking into whether or not these transactions would be subject to an equalization levy.
“Tracking these transactions is critical for the tax agency. Any transaction in which one of the parties is not based in India could be hit with a 5% additional tax in the form of an equalization levy by the government.
Many Indians have started earning interest by depositing bitcoins with the site for a set period of time.
“Non-residents are subject to a 20% withholding on interest plus relevant surcharges and cess under the income-tax legislation or the treaty, whichever is more advantageous, and residents are subject to a 10% withholding on interest plus applicable surcharges and cess. Because this is currently an uncontrolled field, the IRS has yet to give explicit guidelines on the subject “Amit Maheshwari, a tax partner at AKM Global, explained the situation.
As ET reported in February, many crypto companies are already releasing new products as investors look for methods to save money on their digital assets.