India should consider reducing 1% TDS rate on cryptocurrency trade: Report

India should consider lowering the 1 per cent TDS on crytocurrency trade as a high rate is causing a flight of capital and users to platforms in foreign jurisdictions and the grey market, a report said on Tuesday.

The 'Impact Assessment of 1 per cent TDS on VDAs' report by Chase India and Indus Law said the crypto platforms/exchanges must also perform customer due diligence which can help uncover any potential future risk.

"The existing 1 per cent TDS on crypto trade, combined with the absence of comprehensive regulations, is causing a flight of capital and users to platforms in foreign jurisdictions and the grey market," it said.

The government, from April 1 last year, has brought in a 30 per cent income tax plus surcharge and cess on transfer of virtual digital assets (VDAs), including cryptocurrencies, like Bitcoin, Ethereum, Tether and Dogecoin.

Also, to keep a tab on the money trail, a 1 per cent TDS has been brought in on payments over Rs 10,000 towards virtual digital ...