March 27, 2022
By Anjali Kochhar
The lower house of the Indian parliament Lok Sabha has passed the Finance Bill 2022, which levies a 30% tax on virtual digital assets effective April 1. Any income from the transfer of cryptocurrencies will be taxed. With the passage of the finance bill on Friday, this financial year’s budgetary exercise stands completed.
The amended bill proposed that any losses from the transfer of virtual assets will not be allowed to be set off against the income arising from the transfer of another virtual asset.
Talking about the Finance Bill in the Lok Sabha, Finance Minister Nirmala Sitharaman said that the tax has been proposed considering a lot of transactions are happening in this domain.
The bill also proposed a 1% Tax Deductible at Source (TDS) on payments towards virtual currencies over Rs 10,000 in a year and taxation of such gifts in the hands of the recipient.
Experts had varied opinions on the introduction of the crypto tax in the finance bill.
Shivam Thakral, CEO of BuyUcoin, believes that implementing a single tax for a single crypto rule will be a “massive blow” to the crypto industry in the country.
“If an investor buys Bitcoin in April and sells it at a loss and an investor again buys a Bitcoin in July and sells it at a profit within the same financial year, how will that scenario play out? That’s the reason we have urged the regulators to take a nuanced approach towards crypto and discuss it with the industry stakeholders before arriving at a final decision,” Thakral told Blockchain Asset Review.
He further said that excluding mining costs from the acquisition cost will also discourage investors from investing in crypto-assets with a high maker fee.
“Crypto mining in India is done at a very small scale and such steps will hamper the mining prospects in India, so the overall picture looks gloomy for the Indian crypto industry under the current proposed tax laws,” Thakral said.
Nischal Shetty, founder and chief executive officer of WazirX echoed the opinion of Thakral.
“We firmly believe that there is a need to regulate and tax crypto, but in its current form, it is poised to do more harm than good. It will also fail to provide desired results for the government. It can result in cascading participation on Indian exchanges that adhere to the KYC norms and lead to a rise in capital outflow to foreign exchanges or to the ones that aren’t KYC compliant. This is not conducive for the government or the crypto ecosystem of India,” said Shetty.
Meanwhile, Charles Tan, Head of Marketing at CoinStore found the move to be a good one that will open the doors for regulations.
“India is a tech powerhouse and it has the potential to lead the world in the crypto/blockchain revolution. Some may feel that the tax structure is on the heavy side but it may undergo adjustments to match global expectations as the crypto industry in India enters a more mature phase. We are hopeful that Indian regulators will reach a consensus with the crypto industry soon,” Tan told Blockchain Asset Review.
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.