The TDS has become applicable to the trading of crypto assets and NFTs from July 1
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The February 2022 Budget announcement concerning the levying of 1 percent TDS (Tax deducted at source) has become applicable on the trading and transfer of crypto assets, including NFTs, since July 1. The impact of the same is being felt in the declining trading volumes across exchanges.
Despite its skepticism of crypto assets, the Reserve Bank of India gave recognition to crypto assets in the 2022 Budget via a tax regime built specifically around cryptos. Crypto assets now fall under the ‘specified intangible assets’ category under ‘other sources of income’.
The Finance Bill of 2022 stated that virtual digital assets (VDAs) would be taxed if:
1) VDAs are given as gifts
2) If payment is received in the form of digital assets