How much TDS is applicable on margin orders with leverage?
Updated
With respect to the recent TDS regulations decided by the Income Tax Department of India, Margin trading may attract a higher TDS as you increase leverage since it is applicable on the entire transaction value.
On a crypto-to-crypto (C2C) Margin Buy order, a TDS of 1% is to be deducted on the opening position and 1% on the closing position including leverage.
| Important: It is mandatory for users to maintain a 2% additional amount in their wallets at the start of their margin trades (1% for open position and 1% for closing position). |
For example, let’s check the scenario below.
Let’s say you are trading BTC with 1,000 USDT (margin) and you want to take leverage on this amount. Here’s how your TDS calculation will increase based on your increase in leverage.
Please see the below calculation* for better understanding:
Kindly note that both fees and TDS are applied on the total value of the transaction. TDS required for closing position needs to be taken in the form of extra margin. The effective margin after TDS can therefore increase by upto 20% for 10x leverage on margin trades (refer examples above).
We would request you to be cautious and conduct your trades on Margin carefully after considering the applicable TDS.
To know more about the TDS implications for Margin trades created on or before June, 30, 2022, please click here.
