KuCoin, the cryptocurrency exchange, has announced the introduction of a 1% withholding tax (TDS) for its users in India.
Following the instructions of the Indian authorities, the cryptocurrency exchange will charge TDS on the transfer of virtual digital assets (VDA) from April 10, 2024. KuCoin had earlier registered with the Financial Intelligence Unit (FIU) in India and now aims to comply with the regulator's requirements.
KuCoin has committed to reducing TDS for Indian users and paying the deducted tax as required by the Indian Income Tax Department.
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The tax will be deductible on many crypto transactions, including INR/cryptocurrency marketplace sales, cryptocurrency marketplace buy and sell transactions, and P2P marketplace exchanges. However, tax will not be deducted on INR/cryptocurrency marketplace purchases.
KuCoin informs that the tax rate for most transactions is set at 1%, but in some cases, an additional rate of 5% will be involved based on Section 206AB of the Income Tax Act, 1961. The additional tax is levied if the user has not filed an income tax return for two years or more. For any year, the amount of TDS will be above £50,000.
TDS can be audited or a full exchange trading statement can be requested, making it easier for traders to keep proper financial records and ensure transparency of deductions.
KuCoin emphasized that it remains committed to the privacy of its users and guarantees the security of their assets. The crypto exchange is responsible for compliance as it operates within existing international laws.
The exchange's announcement about the implementation of TDS provoked mixed reactions from clients in India. However, it is worth noting that KuCoin's responsible approach to the tax requirements of the Indian authorities emphasizes respect for the market's legal infrastructure and local laws.
According to KuCoin's statement, TDS is intended to be one of the important measures to create a transparent and regulated cryptocurrency transaction market in India.
It is worth noting that KuCoin is now facing regulatory challenges, as the exchange has been accused of violating privacy by registering with the FIU. However, the exchange has stated that it has not shared any user information with the Indian government.
While KuCoin strives to comply with Indian regulators, it is being dogged by problems in other countries, which has caused its reserves of Bitcoin and Ethereum to shrink. The cryptocurrency exchange has also been accused by the US Department of Justice and the Commodity Futures Trading Commission (CFTC), but KuCoin continues to adapt its services to the changing global regulatory environment.
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