Indians will start paying a 30% capital gains tax on cryptocurrency transactions in less than a week after the country’s Parliament approved a contentious tax measure on Friday.
Indians have to pay the capital gains tax anyway. Moreover, the ones who transact with cryptocurrency will be subject to a 1% tax deducted at source (TDS) plus taxes on cryptocurrency gifts, with out any possibility to offset damages. The law on crypto taxes in India will go into effect on April 1, 2022.
The taxes were first suggested in February 2022. Thereafter, the crypto industry pushed back with a petition on change.org and also an online campaign, in addition to talks with MPs. There had been some hope that the capital gains tax or even the TDS would be reduced, however, neither of these events occurred.
Industry players are considering a Supreme Court lawsuit since that there is little possibility of any modifications to the statute.
Nirmala Sitharaman, the Indian Finance Minister, who introduced the bill, was in charge of shepherding it through the Indian parliament’s lower chamber. Whereas the upper house has indeed made suggestions, it has a minor influence in Indian finance law.
“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,” noted Rajat Mittal, a tax counsel in India’s Supreme Court who advises on cryptocurrency operations.
The bill drew a significant response from the opposition, who criticised the bill’s high level of uncertainty in characterizing crypto, with numerous MPs claiming that crypto taxation would “finish the industry.”
Sitharaman replied to the opposition members stating that “there is no confusing signal” and they “have been very clear that consultations are going on as to whether we want to regulate it to some extent or really very much or totally ban it.” She stated that the government will continue to tax cryptocurrency until then since the citizens are profiting from it.
