The Union Budget 2023, presented by Finance Minister Nirmala Sitharaman on 1 February, 2023, introduced provisions on penalty and prosecution for non-deduction or non-payment of TDS (tax deduction at source) applied on Virtual Digital Assets.
The proposed changes were introduced as amendments to Sections 271C and 276B of the Income Tax Act – the laws relating to the penalty imposed for failing to deduct or remit TDS before the applicable due date. Through these amendments, these provisions will be made applicable to TDS on VDA.
What does this mean?
As per the proposal—which will come into effect once the Parliament passes the Finance Bill—a user (in the case of P2P transactions) or exchange could be penalized with a fine equivalent to the TDS amount by the tax department if the applicable TDS has not been deducted. Further, the user (in the case of P2P transactions) or the exchange could face imprisonment of a minimum of 3 months to a maximum of 7 years if the deducted TDS is not deposited with the government.
But fret not: On CoinSwitch, we have ensured your crypto transactions are TDS-compliant. Since 1 July, 2022, CoinSwitch has deducted TDS on all applicable transactions, and we deposit this with the tax department against your name.
You can view the TDS deductions on the transaction note cum tax invoice that we provide for your transactions. You can download this on the Orders & History page in the Portfolio section of the app by following these steps:
- Open the CoinSwitch app
- Click on the Portfolio tab
- Go to the Orders page on the top-right corner of the screen
- Click on the Crypto to download the respective tax invoice
That’s not all. CoinSwitch also provides users with a quarterly TDS Certificate that shows all the TDS deductions made for the three months to make your tax planning easier. You can download the TDS Certificate on the Reports page by following these steps:
- Open the CoinSwitch app
- Click on Profile on the top-left corner of the screen
- Go to the Reports page
- Select the Period (Quarter and Financial Year)
- Click on Download TDS Certificate
You can also see these TDS deductions reflected on their Form 26AS, which is a detailed account of tax deducted at source (TDS), tax collected at source (TCS), and details about income tax refunds of a taxpayer. You can download your Form 26AS through the Income Tax Department website.
