A long-debated crypto tax law was passed by the Indian parliament last week, causing uproar and disappointment within the crypto community.
In India, crypto transactions will now be subject to a capital gains tax of 30%. Transactions will also be treated under a similar regime to gambling wins and losses in the country, meaning that losses can’t be written off – but gains will be taxed. Moreover, those who buy or sell crypto will have to pay a 1% tax deducted at source (TDS).
India’s government has been hostile to crypto from the start of the proposal, which materialized after Finance Minister Nirmala Sitharaman’s statement in November 2021 that the government would not recognize bitcoin as a currency. And last week, while discussing the tax proposal, she said that the government is taxing cryptocurrency because people are making money.
Some Parliamentarians and the crypto industry in India reacted strongly against the bill, saying that it would do more harm than good and eventually end the crypto industry.
Nischal Shetty, CEO of India’s largest crypto exchange WazirX, took to Twitter to voice his frustration by starting campaigns such as #ReduceCryptoTax and #UnfairCryptoTax, saying that India will lose talent and capital will flow to other foreign crypto exchanges.
There is a sense of betrayal among crypto leaders in India who have been waiting for constructive regulations, especially since they collaborated with government agencies to set the rules, but now it feels like all their efforts were in vain. Sathvik Vishwanath, co-founder and CEO of Unocoin, told CoinDesk that he’s sad that none of the requests of the industry have been fulfilled.
The crypto industry in India will obviously experience setbacks from the new taxes, which will go into effect on Apr. 1 and the TDS will start on Jul. 1. However, it doesn’t seem like the crypto leaders are going to give up so easily. They could go to the Supreme Court and challenge the new crypto tax law – which is a cumbersome and time-consuming process.