The CoinDX said that lower TDS on crypto will improve compliance and tax transparency.
A report was released by CoinDX that attempted to highlight the issues with India’s crypto tax policies, while seeking reforms from the government in order to improve compliance and tax transparency in the country. The report stated that the FIU-registered crypto exchange is the latest of many firms that have attempted to appeal to the government to reduce the taxes on cryptocurrencies in the country.
“A large body of modern economic literature suggests that the marginal tax rate is inversely correlated with reported income and positively correlated with evasion, as observed with the imposition of one percent TDS on VDAs in India,” the report noted.
The report named “Redesigning TDS for Transparency and Compliance’, pointed out that the one percent TDS on all crypto transactions was initially envisioned as a transparency and compliance tool but its application is not aligned with the nature of digital asset markets, spelling losses for the industry players and participators.
As per the report a study of India’s crypto tax regime revealed that individuals who have evaded taxes in the past may have done so because of the higher marginal tax rate. The firm also claims that the one percent TDS has led to a 90 percent drop in trading volumes, which would lead to a drop in income for investors.
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