The 1 per cent TDS will hurt crypto volumes, says Kamath. However, major cryptocurrencies saw prices rise
Nithin Kamath warns that cryptocurrency volumes will drop sharply now that Budget 2022 has presented a 1 per cent tax deducted on source (TDS) on virtual asset-based transactions. “I missed the 1% TDS on all Crypto trades, similar to the TCS of 0.1% on Gold, and I assumed that the TDS is only on the gains. With this 1% TDS, I think crypto volumes in India will drop off the cliff come July 1st, 2022 when it is implemented," the Zerodha CEO and co-founder tweeted.
The crypto world, however, had a good day with nine out of the top-10 digital tokens trading at higher prices today. Terra was the exception. Meme token Dogecoin leaped by more than 7 per cent while its peer Shiba Inu saw its price jump 6 per cent, according to Coinmarketcap.com data at 6.00 pm. Bitcoin, too, saw an increase, though a smaller one. Its price was at around $42,659, a steady increase of 2.85 per cent in the last 24 hours, according to data by Coinmarketcap.com data at 6.00 pm. Ethereum saw a similar level of increase with its price rising a little to reach about $3,073, a rise of 2.12 per cent.
Meanwhile, reports on financial filings show that Ted Cruz, a pro-crypto senator of Texas, US, increased his Bitcoin holdings despite uncertainty on crypto regulations. When Bitcoin was down in January 2022, the Republican senator purchased a load of BTC tokens. As per a financial filing, he invested between $15,000 (roughly Rs 11 lakh) to $50,000 (roughly Rs 37 lakh) to purchase the lot. The exact amount is not known. Taking advantage of the lower prices of BTC, he bought on January 25, when BTC was trading at around $37,000 (roughly Rs 27 lakh).
Cruz is among other senators who support cryptocurrencies even though crypto regulatory guidelines are still being discussed by the US authorities.
In India, the scenario is different as the government brought in a tax of 30 per cent on any income arising from transfer of any virtual digital asset. This provision will be applicable from April 1, 2022. Many of the details of the new tax rules are still being debated and ironed out. Some say the steep taxes will shrink the popularity of cryptos, while others feel this is a step towards regularisation of the asset class and thus, a positive development.