- Indian tax authorities are cracking down on Binance traders who had skipped the 1% TDS rule, imposing stringent penalties.
- A 30% tax is being imposed on overall trading turnover rather than merely profits, which is resulting in heavy financial pressures for defaulting traders.
- The authorities are leveraging bank data and foreign sources to monitor offshore transactions, which means tighter regulation of foreign crypto exchanges.
India’s tax department is clamping down on crypto traders who have been operating on Binance without adhering to the tax norms of the country. They are targeting those who did not abide by the 1% Tax Deducted at Source (TDS) rule that has to be levied on each crypto transaction.
Although Indian exchanges have been implementing this tax, most of the traders shifted to offshore platforms such as Binance to evade it. Authorities are now identifying such users and imposing strict penalties.
Traders Face Unexpected Tax Burden
The issue of major concern among the traders is the application of the tax. Rather than taxing only the profit, authorities are levying a flat 30% tax on the total trading turnover.
This implies that if one had a trading volume of ₹50 lakh but only earned ₹5 lakh of actual profits, the tax is being applied on the full ₹50 lakh. This leads to a whopping ₹15 lakh bill for tax, making it absolutely clear that the government wishes to discourage defaulting.
This action indicates the growing vigilance on crypto exchanges based abroad. As Binance is not registered in India, it was not implementing the TDS rule, which has now landed its users in a problem. Banks’ data and international sources are being used to trace transactions and maintain compliance.
Traders trading through foreign exchanges are being instructed to comply with tax rules so as not to incur heavy monetary penalties.
Stricter Rules Change the Crypto Landscape
With tougher enforcement, it is clear that the government is finally serious about regulating the cryptocurrency market.
Traders who have been evading tax regulations may now be forced to think twice about their tactics, as authorities are intent on ensuring compliance even on offshore exchanges.
