The Indian Finance Minister Ms. Nirmala Sitharaman while presenting budget this year, proposed 30% tax on capital gains from Crypto assets. After passing of Finance Bill by the Parliament on 25th February, finally, this has taken the shape of law and Indians would now begin paying the tax from April 1, 2022.
In addition to the capital gains tax, Indians will also pay a 1% TDS (Tax deducted at source) on buying or selling crypto coins or assets from July 1, 2022. Even the taxes on crypto gifts come under the taxable periphery.
As though this wasn’t enough, the government has further zeroed in the ability to take deductions for losses.
As expected, the move that initiated a turmoil in the crypto market since its inception has turned to disappointment now.
The issue of Digital currency or Cryptocurrency is being hotly debated everywhere in the world. Indian Parliament is no exception. Many members of parliament presented their arguments, both in favor as well as against the Cryptocurrencies.
During debate in Lok Sabha (the lower House of Indian Parliament) on Cryptocurrencies, notable speakers were Mr. Pinaki Mishra of the BJD party, Mr. Nishikant Dubey of BSP party almost supported the Cryptocurrencies saying new technology is the need of the day.
On the other hand, Mr. Gaurav Gogoi of INC, Ms. Supriya Sule of NCP opposed the Cryptocurrencies and accused the government of sending out mixed signals with regard to banning of Cryptocurrencies. Ms. Sule demanded total ban on it.
Mr. Nishikant Dubey of ruling party BJP though denied that the Government is spreading confusion about cryptocurrencies, but stated that cryptocurrencies are operating in Dark Net and being used in corruption and illegal drugs trade.
Government’s Opinion:
Finance Minister of India Mrs. Nirmala Sitharaman introduced and navigated the proposal in the Lok Sabha. Most of members of Parliament speaking on Cryptocurrencies asked for more clarity in classification of crypto assets. Some of the members even considered this tax law as a death blow to the industry.
While the Rajya Sabha opposed the bill but the role of the house is minimal in finance legislation.
Sitharaman in response said that the move is a try to regulate the sector but consultations in the regard are going on in respect to ban it totally. She further added that people are making profits from Crypto transactions and so the government is taxing them.
She also commented that the TDS is “more for tracking, it is not an additional or new tax” and that “TDS can always be reconciled with the total tax to be paid to the government.”
Investors’ Opinion:
The whole community of crypto enthusiasts is dispirited by the decision. Naturally, who would like to pay tax willingly at the rate of 30%. The investors are considering it as a hurdle in the growth of this industry.
After passing of Finance Bill, the proposal of 30% tax on has taken the shape of law. After their failure to convince the lawmakers not to impose tax on crypto assets, the crypto-investor community in India especially the Crypto exchanges have been left with the option of challenging the law in the Supreme Court or the various State High Courts.
Bigger concern for these exchanges is that their business clients and investors will shift to exchanges located in other countries where no such tax is levied on crypto currencies.
