BENGALURU: Crypto exchange WazirX has asked its users not to panic and that they should take the right decision. “WazirX has a framework for complying with the TDS(tax deducted at source) as per government notification. Your funds are safe with us,” the crypto exchange said.
This comes at a time when many of its users are opting for withdrawal. “In light of recent developments, we have noticed that users are opting to withdraw their funds to international exchanges. However, in the process, they may unknowingly be non-compliant. International exchanges don’t have TDS frameworks in place,” the crypto exchange said.
Since July 1, the transfer of VDAs (virtual digital assets) such as cryptos has been attracting 1% TDS under section 194S of the Income-tax Act. Ever since the Enforcement Directorate (ED) froze the crypto exchange’s assets worth Rs 64.67 crores, and it raised questions on ownership of WazirX, investors have been worried about their funds. Binance, the largest crypto exchange, has disowned WazirX and also ceased off-chain fund transfer between the exchange and WazirX.
Off-chain transactions are processed outside the blockchain. When asked how this off-chain fund transfer affects users, Edul Patel, CEO and co-founder, of Mudrex, a crypto investment platform, said converting crypto to fiat currency such as INR would bring them under the regulatory purview of taxes. It is the same as with other financial assets such as stocks or bonds. WazirX, in a statement, on Tuesday clarified that off-chain transactions between WazirX and Binance can only be done by a user between their own account on the two platforms. Hence, know your customer (KYC) details are available for all off-chain transfers as well.
WazirX is a platform co-operated by Zanmai Labs and Binance. Zanmai Labs has a no-tolerance policy towards any illegal activities using WazirX, said the exchange. “For every transaction, we are able to produce the KYC details of the relevant user. We do not accept any cash transactions... ED appears to be investigating the transactions of certain users and Zanmai Labs has no affiliation to such users and is unaware of the purpose of their transactions,” it added.