New Crypto Tax Rules In Effect
After the approval of Finance Bill 2022 by the parliament, the new crypto tax rules came into effect on April 1. Crypto income is now subject to a flat 30% tax, with no deductions and loss offsets.
On April 1, crypto exchanges in India began seeing sharp declines in trading volumes. Aditya Singh, the YouTube channel “Crypto India,” shared screenshots via Twitter that showed a sharp drop in trading volume on four Indian cryptocurrency exchanges: Coindcx (bitbns), Zebpay and Wazirx.
“This is only the beginning of the decline in such a great ecosystem which we had in India,” Shivam Chhuneja commented. “Our government should think about taxation rules to bolster the industry while also increasing their tax revenue. Crypto trading is a popular way for people to make a living.
India’s finance ministry stated last week in Lok Sabha (the lower house of parliament) that no deduction is allowed in respect of any expenditure other than the cost of acquisition or allowance. Furthermore, losses from crypto transactions can not be offset against gains.
Ashish Singhal, cofounder and CEO at crypto trading platform Coinswitch commented:
Flat 30% tax, which does not distinguish short-term capital gains and long-term gains, without any provision for deducting expenses or offsetting losses, is incompatible with the tax framework applicable to other asset classes.
Change.org has received petitions from crypto supporters in India asking for reasonable crypto tax policies. The petition currently has more than 103K signatures.
Another tax provision that can be very damaging will take effect on July 1. Crypto transactions will be subject to a 1% tax deduction at source (TDS). Recently, an Indian parliament member explained why this is harmful to the crypto industry.