Is TDS applicable on “Gross order amount” or “Net order amount”?

According to the CBDT circular dated June 23, 2022 [read here], TDS is applicable on the Net order amount. In simple words, the Net order amount is the transaction value minus the exchange fees.

For example, if you want to sell BTC worth ₹1000, an exchange fee of 0.2% is applicable on this amount after which the transaction value becomes ₹1000 x 0.2% =  ₹2. Here, NET ORDER AMOUNT = ₹998.

In order to comply with the revised Income Tax regulations, we will be soon shifting to the NET TDS DEDUCTION formula, as per which the calculation is to be set at 1%. To understand this better, please follow the examples below.

How we (CoinDCX) did this before the revised IT circular (Previous case)

Let’s say you want to sell BTC worth ₹1000.

We will deduct 1% TDS on the entire transaction value, i.e. 1% of ₹1000 = ₹10.

We will then also deduct the exchange fee, i.e. 0.2% of ₹1,000 = ₹2.

Now, the total value you will get back is ₹1000 - 12 = ₹988.

This calculation is called “GROSS TDS DEDUCTION”.

How we (CoinDCX) shall do it after the revised IT circular (Revised case)

Let’s say you want to sell BTC worth ₹1000.

We will first deduct the exchange fee, i.e. 0.2% of ₹1000, which amounts to ₹2, thus bringing the total transaction value to ₹998.

After this, the 1% TDS would be applicable on the remaining amount, i.e. 1% of ₹998, which amounts to ₹9.98.

With these deductions made, the balance that will be deposited to your account is ₹998 - ₹9.98 = ₹988.02.

This calculation is called “NET TDS DEDUCTION”, which is in adherence to the Income Tax Department regulations.

To ensure that CoinDCX does not deduct more TDS from its customers than the one prescribed under the CBDT circular shared on June 23, 2022, we are going to refund this extra TDS, however minuscule it may be, i.e., 0.002% (on a sell transaction of fees 0.2%). We will process this refund for all applicable trades at once when our process of moving to TDS calculation on a “Net order amount” basis is completed. We expect this to be completed within the next few weeks. We'll keep you posted!

On the buy-side of transactions where TDS is applicable, which are on Spot crypto-to-crypto (C2C) purchases or Margin Long orders, we are already calculating TDS on net order amount (without the fees). Thus, no changes need to be made there! For any further clarification, please reach out to us via Support.