Following the implementation of a new tax regulation in India, crypto trading volumes have fallen. The new laws tax crypto revenue at a single rate of 30% and do not enable losses to be offset against gains.
New Crypto Tax Regulations Have Been Implemented
After the country’s parliament adopted Finance Bill 2022, the new crypto tax laws went into effect on April 1. Crypto income is now subject to a 30 percent flat tax, with no deductions or loss offsets allowed.
Trading volumes on Indian cryptocurrency platforms began to plummet on April 1. Aditya Singh, the creator of the Youtube channel “Crypto India,” shared screenshots on Twitter showing a significant drop in trade volume at four major cryptocurrency exchanges in India: Coindcx, Bitbns, Zebpay, and Wazirx.
“This is simply the beginning of the demise of such a tremendous environment that we had in India,” Shivam Chhuneja, a Twitter user, said. “Our government must consider taxes policies that benefit the industry while also increasing tax income. Crypto trading is a source of income for many people.”
“No deduction in respect of any expenditure (other than cost of acquisition) or allowance is allowed,” India’s finance minister said last week in the Lok Sabha, the lower house of parliament. Furthermore, losses incurred as a result of crypto transactions cannot be offset by gains.
Co-founder and CEO of crypto trading company Coinswitch, Ashish Singhal, said:
A 30 percent flat tax that does not distinguish between short-term and long-term capital gains and makes no allowance for deducting expenses or offsetting losses is out of step with the tax system for other asset classes and is discriminatory.
On Change.org, crypto advocates in India have petitioned the government to implement acceptable crypto tax rules. More than 103K people have signed the petition as of this writing.
Another unfavourable tax provision will take effect on July 1. Crypto transactions will be subject to a 1% tax deducted at source (TDS). A member of the Indian parliament recently outlined why this is bad for the crypto business.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.
