Indian crypto tax policy has become the talk of the town for crypto investors and exchange providers in recent weeks. In just one week, Indians will start paying a cumbersome 30% tax on the proceeds made on cryptocurrencies after the nation’s Parliament passed the proposal on Friday.
India’s Crypto Tax Law To Become Effective April 1
Traders in India will be required to pay staggering 30% taxes on gains from cryptocurrencies such as bitcoin and ethereum, but not be able to show losses incurred due to market drawdowns or security breaches to offset taxation on profits. Additionally, India will also impose a 1% tax deduction at source on each transaction. Uh — wait, what?
The 30% tax targeting crypto transactions is notably the highest in India and is similar to the tax imposed on gambling and lottery tickets. The crypto tax policy is now set to come into effect beginning on April 1st.
The legislation was passed despite the majority of the members of the crypto community voicing their opposition towards the crypto tax rules since they were first proposed by Finance Minister Nirmala Sitharaman in early February.
Despite boasting an estimated population of 1.4 billion, India has not developed a clear regulatory framework for crypto assets since the nation’s supreme court famous decision in March 2020 to reverse a ban from the Reserve Bank of India on banks’ dealing with crypto firms.
Most experts argue that the tax law will exacerbate the situation in India, making it more difficult for regular investors and crypto exchanges to conduct activities within the country.
Several members of parliament who were opposed to the proposal during the Thursday discussion argued that the taxes on crypto income are effectively a death knell for the nascent industry. In response, Sitharaman insisted the government has made it clear that consultations are still ongoing as to whether to govern its local cryptocurrency market or simply impose a blanket ban.
Despite the latest tax policy posing a grave threat to the years of infrastructure created by crypto unicorns, she says the government will continue taxing crypto as investors are profiting from it.
It will be unsurprising to see entrepreneurs and well-known crypto firms leave India to set up shop in crypto-friendly nations where there are no unrealistic tax laws.