India’s Capital Gain Tax On Crypto Transactions

• India passed its crypto tax bill into law today.
• The stiff provisions are likely to discourage crypto activity in the region.
• Industry players may look to the supreme court next to ease the provisions of the law.

India’s crypto tax legislation today was signed into law by the parliament. After over a month of appeals from the industry, the Indian authorities refused to budge.

Tough Times Ahead

Indian crypto investors would be disappointed to learn that they are now bound to pay 30% tax capital gains tax on crypto transactions, 1% tax deducted at the source (TDS), and tax on digital asset gifts. Moreover, the new law does not allow investors to take tax deductions on losses. 

India’s new law will make trading and investing in crypto even more difficult. Reports indicate that the government continues to see the nascent market as a form of gambling. The new law is expected to become enforceable from the beginning of April.

Finance Minister Nirmala Sitharaman had introduced the bill at the beginning of February to the lower house of the parliament. Since the introduction of the bill, Industry players have made efforts to interface with the government to see if they would ease the provisions. Notably, campaigns and petitions were also up online, but it appears to have all come to naught. 

Rajat Mittal, a tax attorney, clarified that despite efforts from industry participants to come to terms with the government, the government only seems to have tightened the noose on the industry. Moreover, fears exist that if the crypto is placed under Goods & Services Tax (GST), taxes collected on services rendered by exchanges may be raised by 10%.

Tax Attorney Rajat Mittal said, “The government has not accepted any suggestions of the crypto industry to tone down the crypto taxation but has, in fact, tightened the taxation rules making it tougher and perhaps, almost impossible for daily traders and the exchanges to conduct activities in India.”

Lack Of Clarity And State Of Regulations

Some members of the Indian parliament opposed to the new law have spoken up against the lack of clarity in its definition of a cryptocurrency. Some also fear that the new law will be the end of the industry in India.

In response, Finance Minister Nirmala Sitharaman, who came up with the bill in the first place, has said there is no confusion whatsoever. She noted that on regulations, “consultations are going on as to whether we want to regulate it to some extent or really very much or totally ban it.” Till the country decides, she says they will continue to tax it.

Several top government officials still seem opposed to the crypto market. Not so long ago, the deputy governor of India’s central bank, T Rabi Sankar, likened crypto to Ponzi schemes. The government at the moment is shifting focus to roll out their CBDC, which they say could launch this year. Meanwhile, crypto industry players are yet to throw in the towel and are considering taking the issue of the new tax law to the Supreme Court.

Source: Read Full Article