The Indian Crypto Industry seeks a revision on the 30% tax rate from the government. The 2022 Union budget announced a 30% tax imposition on cryptocurrency.
The Blockchain and Crypto Assets Council drafted a memorandum that will consider the several implications of the new tax rule.
The memorandum will also monitor the impact of the new tax rule on the domestic crypto ecosystem and the Indian economy.
Furthermore, the Union Budget has also mandated an additional 1% TDS on crypto transactions. The 1% TDS imposition is to tax amounts exceeding a specific limit and establish a record trail.
Indian Economy and Cryptocurrency
TV Somanathan, Finance Secretary, said, “The Income Tax does not exempt any income other than agri income. Income from cryptocurrencies has been taxable even before this law, it is taxable today, and it will be taxable after April 1. What is changing is the regime of taxation. It is taxable even before April 1 but not at 30%.”
Moreover, during crypto transactions, losses would are not written off like any other source of income.
Finance Minister Nirmala Sitharaman noted in her speech, “phenomenal increase in transactions in virtual digital assets.”
Founder and CEO of CoinSwitch, Ashish Singhal, told CNBC the 30% tax on cryptocurrency was a bit much.
He said on “Street Signs Asia,” “What this signals is that government recognizes this industry and hopefully the crypto bill would address the legality of this ecosystem as well.”
Singhal also explained the industry body in India of Blockchain and Crypto Assets Council aims to work with the government.
They hope to make the tax for crypto transactions on par with other asset classes over time.
The Blockchain and Crypto Assets Council seeks revision on 30% tax rate
While the proposed tax on cryptocurrency clarifies the government’s motives, various users are hard-hit by the steep tax rate.
He also said, “What the government has done very smartly is to separate the currency use case of crypto to the asset class use case of crypto. And then, they have recognized crypto assets as an asset class in itself. So that is a big move in my opinion in legitimizing the asset-class use case, the investment use case of crypto.”
Central Bank to issue digital Rupee
Nirmala Sitharaman proposed in her budget speech that the Central Bank would issue digital Rupee using “blockchain and other technologies.”
She said, “Digital currency will also lead to a more efficient and cheaper currency management system.” The digital rupee “will give a big boost to digital economy.”
Since last year the Central Bank has been studying the several aspects of digital currency on security, effect on monetary policy, impact on India’s financial sector, and currency circulation – RBI Governer Shaktikanta Das told CNBC.