Crypto trading volumes in India have plummeted following the new tax law entering into force. The new rules impose a 30% flat tax on crypto income and do not allow losses to be offset against gains.
New Crypto Tax Rules in Effect
The new crypto tax rules entered into force on April 1 after the country’s parliament approved Finance Bill 2022. A flat tax of 30% now applies to crypto income with no deductions or loss offsets allowed.
On April 1, crypto exchanges in India began seeing sharp declines in trading volumes. Aditya Singh, who runs the Youtube channel “Crypto India,” posted screenshots on Twitter showing a sharp decline in trading volume at four major cryptocurrency exchanges in India: Coindcx, Bitbns, Zebpay, and Wazirx.
“This is just the start of the decline of such a great ecosystem that we had in India,” Twitter user Shivam Chhuneja commented. “Our government must think about taxation rules that bolster the industry and their tax revenue at the same time. Many people earn their living form crypto trading.”
India’s finance ministry explained in Lok Sabha, the lower house of parliament, last week that “no deduction in respect of any expenditure (other than cost of acquisition) or allowance is allowed.” Furthermore, losses from crypto transactions cannot be offset against gains.
Ashish Singhal, co-founder and CEO of crypto trading platform Coinswitch, commented:
A flat 30% tax that does not differentiate short-term capital gains from long-term gains, with no provision for deducting expenses incurred or offsetting losses is not in tune with the tax framework for other asset classes and is discriminatory.
Crypto supporters in India have petitioned on Change.org for the government to introduce reasonable crypto tax policies. At the time of writing, the petition has garnered more than 103K signers.
On July 1, another damaging tax provision will come into effect. A 1% tax deducted at source (TDS) will be imposed on crypto transactions. An Indian parliament member recently explained why this is detrimental to the crypto industry.
What do you think about how India is taxing crypto income and transactions? Let us know in the comments section below.
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Source: Bitcoin News