Crypto Trades could Incur Penalties for Foreign Exchanges

Crypto trades could incur penalties as per the new tax regime imposed in the union budget 2023

For investors and dealers newly accessing the crypto ecosystem, it is currently undeniably complicated. After a long wait for the union budget 2023, the budget remained unimpressive for the cryptocurrency industry. The market regulation policies of the Indian government for crypto trades appear to be more stringent. Within a day after the 2023 economic survey voiced worries about the sector's excessive fluctuation and the necessity of global controls, Nirmala Sitharaman in the union budget made no reference to the crypto industry during her declaration on February 1. Nevertheless, the Finance Bill made reference to a change to Section 271C of the Income Tax Act, crypto trades could incur penalties. Also, make it punishable for failing to pay crypto or VDA Tax deducted at source. Furthermore, according to Clause 119 of the Finance Act, of 2023, the inability to pay TDS on cryptocurrency transactions for foreign exchanges can end in a seven-year prison term. This was confirmed by Mr. Ashish Singhal's tweet who is the CEO and Co-Founder of CoinSwitch.

For cryptocurrency transactions, the TDS of 1% is still in effect. There is a clarification, though. When using P2P or other methods, crypto exchanges have had the responsibility of deducting TDS, but there have never been penalties for failing to do so.