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How important is it to file TDS on crypto transactions?


Tax Deducted at Source (TDS) is a crucial taxation mechanism that ensures that taxes are collected from the source of income. It acts as an advance tax that is deducted by the payer while making payments such as salaries, rent, or professional fees. TDS helps in the efficient and timely collection of taxes, which in turn contributes to the nation’s revenue.

With the introduction of the 2022 budget in India, crypto holders are now subject to a 1% TDS and 30% on all crypto gains. However, it’s not enough to merely deduct TDS; filing it correctly is also essential. The deductor must issue a TDS certificate to the deductee.

It’s vital to stay aware of changes made to tax laws and regulations with every new budget, as they impact TDS filing. By being aware of these changes and ensuring correct filing, individuals can avoid penalties and legal issues. Ultimately, this contributes to maintaining compliance with tax laws and regulations and fosters the country’s economic growth.

Here are some tips on how to file your TDS post Budget:

When filing TDS, it’s essential to first determine which form to use. Two common forms are Form 26Q and Form 26QE. Form 26Q is used to file TDS details on payments made other than salary. It includes information on the total amount paid during the quarter and the TDS amount deducted. This form must be submitted quarterly.

On the other hand, Form 26QE is used to deposit the tax deducted on any VDAs. This form requires the tax deducted under Section 194S to be paid to the central government within 30 days from the end of the month when the deduction is made. Challan-cum-statement can be made in Form 26QE electronically for this kind of deduction.

It’s important to note that any taxpayer paying taxes may have TDS deducted by the payee in certain cases. Proper filing of TDS on the appropriate form is crucial to avoid penalties or legal issues. By submitting these forms accurately and timely, taxpayers can help maintain compliance with tax laws and regulations.

After the budget, the next step in filing TDS is collecting necessary details such as the PAN and other formalities. Ensuring the accuracy of these details is crucial to avoiding errors during TDS filing. Therefore, it’s advisable to double-check before submitting any documents.

The final step involves submitting the TDS form to the government, which can be done independently or with the help of a crypto tax expert. It’s important to file the form correctly and on time to avoid any legal or financial consequences.

Individuals can successfully navigate the TDS filing process by following the correct procedures and seeking professional advice when needed.

Summarising,when filing your TDS after the Budget, these are several important tips to keep in mind:

Firstly, ensure you have collected the relevant TDS certificates by filing

Form 26Q or Form 26QE. Next, verify that the information provided in these certificates matches your records.

To accurately calculate your total taxable income for the financial year, you should include all sources of income. Take advantage of all eligible deductions and exemptions to reduce your tax liability, ensuring you claim them appropriately. Finally, pay any remaining tax liability, if applicable, and thoroughly verify your ITR.

By following these general tips and staying up-to-date with the latest TDS guidelines, you can successfully file your TDS and remain compliant with tax laws and regulations.

Please be aware that there are late filing fees under Section 234E, which entail a daily fine of 200 until the return is filed. This penalty must be paid every day until the total fine equals the TDS amount or date of filing TDS return.

Author: Mr Punit Agarwal, Founder KoinX

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