After the tax law came into effect, crypto trading in India has dropped dramatically. New rules place a flat 30% tax on all crypto income. Losses cannot be offset by gains.
The new Crypto Tax Rules are in effect
The new crypto tax rules entered into force on April 1 after the country’s parliament approved Finance Bill 2022. The crypto income will now be subject to a 30% flat tax with no loss offsets and deductions.
On April 1, crypto exchanges in India began seeing sharp declines in trading volumes. Aditya Singh, who runs the Youtube channel “Crypto India,” postedTwitter screenshots show a dramatic decline in trading volume on four Indian cryptocurrency exchanges: Coindcx. Bitbns. Zebpay.
“This is just the start of the decline of such a great ecosystem that we had in India,” Twitter user Shivam Chhuneja commented. “Our government must think about taxation rules that bolster the industry and their tax revenue at the same time. Many people earn their living form crypto trading.”
India’s finance ministry explained in Lok Sabha, the lower house of parliament, last week that “no deduction in respect of any expenditure (other than cost of acquisition) or allowance is allowed.” Furthermore, losses from crypto transactions cannot be offset against gains.
Ashish Singhal is the co-founder of cryptocurrency trading platform Coinswitch and its CEO.
The flat tax of 30% that doesn’t differentiate between short-term capital gain and long-term gains without allowing for the deduction or compensation for expenses is incompatible with other asset classes tax structures. It is also discriminatory.
Change.org has received over 103K signatures from crypto supporters in India. They are asking for reasonable tax policies to be introduced by the government. As of the writing date, more than 103,000 people have signed the petition.
A new tax provision that is extremely harmful will take effect July 1. On crypto transactions, a tax deduction at source of 1% (TDS), will apply. Recently, an Indian legislator explained the reasons why this tax is bad for crypto.
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