As you are likely aware, Tax Deduction at Source or “TDS” will be applicable on the transfer of “Virtual Digital Assets”, including crypto assets, from 1 July 2022, as per Section 194S of the Income-tax Act. To help make your trading experience as simple and stress-free as possible, Unocoin has jotted down every pointer that you need to know about the upcoming changes.
For anyone, one of the two TDS slabs applies to their crypto-asset transfer. The reader/Unocoiner can select one of the below slabs they fall into and change it in their User Settings in the app or website.
a) 1% if the user has filed Income Tax Returns for the last two years; or
b) 5%, if the user has not filed Income Tax Returns in at least one year of the last two years and has TDS deductions of equal to or more than INR 50,000 in at least one year (of the last two years).
For explanation purposes below, we consider that you fall under the 1% TDS bracket.
- The TDS only applies if your total/cumulative/aggregate trades for TDS cross INR 10,000 in the financial year. (Explained with an example at a later stage)
- The TDS amount will be deducted by Unocoin from your trade value and deposited on your behalf.
- As per TDS guidelines, Unocoin will deduct the applicable percentage on both Sell and Buy orders for Crypto-to-Crypto transactions.
Within the prescribed timeline of TDS return filing, the deducted TDS amount will reflect in your Form 26AS. Readers/Unocoiners can claim this tax from the Income Tax department while filing their yearly Income Tax Return.
When is TDS applicable?
– INR-to-Crypto (Fiat to Crypto or F2C) Buy Orders — There is no TDS which is applicable
– Crypto-to-INR (Crypto to Fiat or C2F) Sell orders — 1% TDS applicable on the net order value
– Crypto-to-Crypto (C2C) Both Buy and Sell Orders — 1% TDS applies to the net order value.
Let us simplify this for you.
Example 1: Your trade is less than or equal to INR 10,000 in a financial year — No TDS deduction is applicable.
Sell Trade 1 of INR 10,000 — NO TDS applicable.
Order value = INR 10,000
Unocoin’s transaction fees (0.3% of INR 10,000) = INR 30
GST on transaction fees (18% of 0.3% of INR 10,000) = INR 5.4
Total receivable = INR 10,000 — (INR 30 + INR 5.4) = INR 9,964.6
Hence, TDS is not applicable.
When your subsequent Sell order adds to your previous Sell order(s) to make the total Sell order in a financial year more than INR 10,000:
Sell Trade 2 of INR 5,000 (in the same financial year) — TDS now applicable.
Order value = INR 5,000
Unocoin’s transaction fees (0.3% of INR 5,000) = INR 15
GST on transaction fees (18% of 0.3% of INR 5,000) = INR 2.7
Proceeds = INR 5,000 — (INR 15 + INR 2.7) = INR 4,982.3
TDS applicable (1% of (INR 9,964.6(Previous trade)+ INR 4,982.3)) = INR 149.46
Final calculation (Actual receivable amount) = INR 4,982.3 — INR 149.46 = INR 4832.84
All the subsequent trades hereafter will have regular 1% TDS till the end of the financial year.
Example 2: When your first Sell order is more than INR 10,000
Sell Trade 1 of INR 20,00,000 — TDS applicable.
If you place a Sell order for 1 BTC at INR 20,00,000, your order information will look something like this:
Order value = INR 20,00,000
Unocoin’s Transaction fees (0.3% of INR 20,00,000) = INR 6,000
GST on Transaction fees (18% of 0.3% of INR 20,00,000) = INR 1,080
TDS applicable = 1% of net order value, that is, 1% * (INR 20,00,000 — INR 6,000 — INR 1,080)) = INR 19,929.20
Final calculation (Actual receivable amount) = INR 20,00,000 — (6,000 + 1,080 + 19,929.80) = INR 19,72,990.80.
Crypto-to-Crypto trades: The TDS applies for both Buy and Sell transactions between one crypto and another crypto conversations.
What should you do now?
As a Unocoiner,
1. Please open Unocoin’s app and click on More.
2. Go to the User Settings section to find the new icon.
3. Select the appropriate tax slab you fall into. By default, the 1% slab would be selected.
- All Sell open orders on the exchange will be cancelled for lite users.
- All forms of transactions that will be executed, including exchange orders, will attract TDS from 1 July 2022.
- Users can find the information about their TDS in the invoices provided by Unocoin that gets generated within 48 hours of the trade.
- Please note that Unocoin (Website and Application) shall be under maintenance from 30 June at 10:00 PM IST until 30 June at 11:59 PM.