Days after the government announced a hefty 30 percent tax rate and a 1 percent tax deduction at source (TDS) for gains and transfers of virtual digital assets, fintech Clear has said that it will now offer solutions for customers to manage their cryptocurrency portfolio and taxes.
The firm which owns tax management and business-to-business SaaS platform ClearTax will help users optimise the amount of taxes they may pay on their crypto investments by advising on how best to transact and invest.
Speaking to Moneycontrol, Archit Gupta, Founder and CEO of Clear said that the offering had been in the works for a while. This makes ClearTax the first platform in India to offer these solutions to customers.
“We will focus on five pillars – working with crypto exchanges for TDS reporting, tying up with the exchanges to have API integrations for taxpayers, tracking decentralized assets to compute tax instances, helping clients optimise taxes and advise from experts,” Gupta explained.
On January 13, the Stripe-backed company had received investments from Aparna Chennapragada, Chief Product Officer at US-based financial services company Robinhood, Surojit Chatterjee, Chief Product Officer of US cryptocurrency exchange Coinbase and Balaji Srinivasan, ex-Chief Technology Officer of Coinbase in what was a precursor to this announcement.
However, with the tax announcements still fresh, the company will await further clarity from the government on how certain activities will attract taxes. The platform will also enable NFT investors, crypto miners etc. to manage their taxes.
“There are differences in interpretation (of taxation) that are emerging and we are looking for clarity on those. We need to know whether losses can be set off across tokens or only among the same tokens, or not available at all etc.”
While Gupta refrained from disclosing which exchanges the company has tied up with, ClearTax’s website mentions CoinDCX, CoinSwitch Kuber, WazirX, Unocoin and Binance.
Currently, the firm’s B2B SaaS vertical draws 80 percent of the revenues and consumer taxes 20 percent. Gupta said with crypto taxes coming in, the consumer tax vertical may see a growth in revenues.
In the US, players like TurboTax, TaxBit and CoinTracker provide tax management services to crypto investors.
In the last few months, Clear ramped up hiring and got 200 people onboard for engineering and product roles and secured a funding of $75 million from Kora Capital, Global fintech Stripe, Alua Capital, Think Investments and existing investors.
The crypto industry has been concerned that such a high tax rate will discourage new investors from entering the space and also lead to a drop in trading volumes as people will refrain from attracting TDS on multiple trades.
In the Budget memorandum, the government has detailed that the 30 percent flat tax rate will be applicable starting April 1, 2023, and the taxes will be levied from the assessment year FY24. The one percent TDS has been levied in a bid to track crypto transactions in the country.
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