It is possible for cryptocurrencies to attract tax rates similar to lottery TDS provisions, if they are sold and bought. This would enable the government to track investors more easily. It is expected that these sales and purchases will be included in the TDS/TCS provisions. Until such time, cryptocurrency sales and purchases may not be included in TDS/TCS provisions. Currently, trading companies report the sale of units and shares of mutual funds.
According to a Taxmann study, cryptocurrency sales may be included in the SFT (Statement of Financial Transactions). As the buying and selling firms already report the sale of shares and mutual funds, cryptocurrency sales and purchases are likely to attract higher taxes. As a result, cryptocurrency losses won’t be allowed to offset other income, and there is a risk of a 30-percent tax rate.
There is no certainty in the future of cryptocurrency taxation. In fact, the proposed Bill will be considered by the federal government during the next Budget Session. While it may not become law before the end of the year, it is hoped that the Bill will be introduced before the end of this fiscal year. The TDS/TCS provisions would apply to the sale of cryptocurrencies, as this would help the government track investors.
Regardless of whether or not cryptocurrency will attract lottery-like TDS provisions, there is a need to understand how crypto gains and losses can be reported to the IRS. This is especially true in the case of lottery-style games, where losses can be carried forward and adjusted against other income. However, if cryptocurrency sales are subject to TDS, they may not qualify as a capital asset and may be considered ordinary income.
While the IRS has already passed a new bill that makes it more difficult for businesses and individuals to claim cryptocurrencies, this law will be applied to cryptocurrencies as well. Brokers, miners, crypto wallets, and lottery operators will have to report the sale and payment of cryptocurrency to the IRS. The lawmakers are also working on a new bill that narrows the scope of the new legislation.
The Indian government may also introduce a tax regime similar to lottery TDS provisions for cryptocurrencies. This is not the only potential regressive taxation for cryptocurrencies. In fact, the tax rate for a particular cryptocurrency is similar to that of a lottery. The Indian government has not yet made a decision about the application of this law to cryptocurrencies. It is currently developing a bill that is based on the concept of an “ordinary asset”.