Indian tax authorities have started cracking down on crypto traders using Binance who failed to comply with the mandatory 1% Tax Deducted at Source (TDS) rule on crypto transactions.
Tightening Tax Control in India
Under India's crypto tax framework, every crypto transaction requires a 1% TDS. While Indian exchanges have integrated this system, many users have shifted to offshore platforms like Binance to avoid it. Tax authorities are now identifying these users and taking strict actions.
Heavy Tax Burden on Traders
Traders are concerned by the way taxes are applied: a 30% tax is imposed not on the profits but on the entire trading volume. For instance, if a trader had a total turnover of ₹50 lakh with only ₹5 lakh in actual profits, the 30% tax is imposed on ₹50 lakh, resulting in a ₹15 lakh tax bill. This method is seen as a penalty for non-compliance and a deterrent against using platforms not following Indian TDS laws.
Increased Government Focus on Offshore Exchanges
This underscores the increasing scrutiny of offshore crypto exchanges by the Indian government. Binance, being unregistered in India, has not enforced TDS collection, putting its users at risk of regulatory penalties. Authorities are using data from banks and international cooperation agreements to track such transactions. Traders are advised to ensure full compliance, even when using foreign exchanges, to avoid hefty financial consequences.
The latest measures by Indian tax authorities signal strict enforcement of tax laws on offshore exchanges and urge traders to comply with all regulations to avoid significant penalties.
