Indian authorities have maintained an optimistic stance regarding its crypto asset income tax. This was demonstrated by the government’s proposal of the Cryptocurrency Regulation of the Official Digital Currency Bill 2021. India currently does not regulate cryptocurrencies or NFTs. Even the RBI attempted to ban crypto back in 2018.
Although the proposed “Cryptocurrency and Regulation of Official Digital Currency Bill” was never implemented, the government’s stance on crypto is still unclear. The Indian government, though still in the process of weighing its position, has now implemented a new law for taxing income and gains from virtual digital assets (VDAs).
Singapore Fintech Festival (SFF), which took place from November 1st to 4, brought the focus to new tax policies. Changpeng Zhao, Binance CEO (CZ) pointed out that high taxes are a major problem for the crypto sector.
Singapore Fintech Festival is a highly anticipated event in crypto and Fintech. There are more than 60,000. The festival also features 850 speakers from banks, international financial services companies, policymaking bodies, and other institutions.
Crypto Exchanges See a Drop in Volume due to High Taxes
CZ stated that the April-effective new Indian crypto tax could kill the sector during a panel discussion. The tax, which includes a 30% transaction and capital gains tax as well as a 1% transaction fee on all transactions in digital assets, is quite high. According to local crypto exchanges, there was a 90% decrease in activities after April’s policy went into effect.
In addition to the increased tax rates, government regulations were tightened. The government has tightened the regulatory processes for crypto platforms. They now require more thorough Know Your Customer (KYC), and other security measures.
Binance bought WazirX in India, a crypto-exchange. However, there was a recent issue surrounding WazirX’s frozen assets. In a short argument between CZ and WazirX’s CEO, CZ revealed that Binance never completed its deal with the embattled crypto exchange. CZ stated instead that Binance provided only wallet services for WazirX and not tech solutions.
According to reports, WaxirZ has seen a drop in its sales volume. In October, it laid off 40% of their workforce.
India may introduce more tax policies
This week’s start saw the proposal of the Central Board of Direct Taxes of India (CBDT), a common ITR format. As a replacement to a series of ITR forms, the board will introduce the new form. This draft ITR form includes fields that need information about foreign companies with an Indian user base.
Several tax professionals commented on the move. It is an effort to incorporate digital assets and web3 companies incorporated in India into the Tax policy. According to the Nasscom latest report, India is home to more than 450 Web3 and crypto start-ups.
60 percent of the approximately 450 companies are located in jurisdictions that support cryptography and follow clear rules.
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