India Targets Binance Traders with 30% Tax for TDS Breach
Tax authorities target Binance traders for missing 1% TDS, imposing heavy 30% tax on turnover instead of profits.
- Indian tax officials crack down on Binance users.
- 1% TDS non-compliance leads to steep penalties.
- Traders taxed on total turnover, not just gains.
India’s tax authorities have begun cracking down on crypto traders using Binance, particularly those who failed to comply with the mandatory 1% Tax Deducted at Source (TDS) rule on crypto transactions. This regulatory move signals tighter enforcement of existing tax laws on offshore exchanges.
Under India’s crypto tax framework, a 1% TDS is required on every crypto transaction. While Indian exchanges have integrated this mechanism, many users shifted to offshore platforms like Binance to avoid it. Now, tax authorities are identifying these users and taking strict action.
Heavy Tax Burden on Turnover, Not Just Profits
What’s causing panic among traders is the way taxes are being applied. In several cases, authorities are imposing a flat 30% tax not on the profits made, but on the entire trading volume—a significant deviation from the standard tax practice based on gains.
For instance, if a trader had a total turnover of ₹50 lakh but only ₹5 lakh in actual profits, the 30% tax is being levied on the ₹50 lakh—resulting in a ₹15 lakh tax bill. This method is being seen as a penalty for non-compliance and a deterrent against using platforms that do not follow Indian TDS laws.
Government Gets Serious About Offshore Compliance
This development underscores the Indian government’s increasing scrutiny of offshore crypto exchanges. Binance, being unregistered in India, has not enforced the TDS collection, putting its users at risk of regulatory penalties.
Authorities are now reportedly using data from banks and international cooperation agreements to track down such transactions. Traders are being advised to ensure full compliance, even when using foreign exchanges, to avoid hefty financial consequences.
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