Indian traders on the world's largest crypto exchange Binance have come under the scrutiny of tax authorities concerning the 1% TDS tax obligations.
Tax Authorities' Demands
In recent weeks, local traders have received notices from the tax office requiring proof of 1% TDS deduction or documents explaining its inapplicability.
Technological Advancements in Investigation
Under the 2022 budget provisions, income from cryptocurrencies is taxed at 30%, alongside a 1% TDS on transactions. Many traders have neglected these rules, prompting action from the tax department. Advanced technologies such as data analytics and Non-Filer Monitoring Systems are being employed to identify tax evaders. Information is collected from social media, emails, and other digital platforms to track hidden earnings and unpaid taxes. Investigations are also underway to determine if Indian traders transferred crypto holdings to foreign platforms to avoid taxes.
Expert Opinion and Future Outlook
Vikram Subburaj, founder & CEO of Giottus, stated that this was bound to happen sooner or later: "Overseas exchanges bypassing TDS requirements are putting Indian traders in a difficult position. If you want to serve investors in India, you should respect and follow the law of the land." With the proposed Income Tax Bill 2025, authorities will have greater access to digital records, facilitating easier tracking of crypto investments and transactions to ensure all traders pay due taxes.
Indian tax authorities are heightening their scrutiny on crypto traders' compliance with tax obligations, leveraging advanced technologies to identify and curb evasion.
