Despite Public Outrage, India’s Divisive Cryptocurrency Tax Policy Becomes Law.
In recent weeks, India’s crypto tax policy has become the main topic of conversation among crypto investors and exchange providers. After the Indian Parliament approved the motion on Friday, Indians will begin paying a large 30% tax on cryptocurrency earnings in less than a week.
Traders in India would be compelled to pay a whopping 30% tax on earnings from cryptocurrencies like bitcoin and ethereum, with no way to balance profits with losses suffered due to market downturns or security breaches. In addition, each transaction would be subject to a 1% tax deduction at source in India.
The 30% tax on cryptocurrency transactions is the highest in the country, and is comparable to the tax on gambling and lottery tickets. The cryptocurrency tax policy is now slated to take effect on April 1st.
Despite having a population of 1.4 billion people, India has yet to build a clear legal framework for crypto assets after the country’s supreme court famously overturned the Reserve Bank’s ban on banks interacting with crypto businesses in March 2020.
The tax regulation, according to most analysts, would aggravate the situation, making it more difficult for normal investors and crypto exchanges to conduct business there.
During the Thursday debate, some members of parliament who were opposed to the idea stated that taxes on crypto revenue was practically a death knell for the embryonic business.
In response, Sitharaman stated that the government has made it plain that consultations on whether to regulate the local cryptocurrency market or just impose a blanket ban are still continuing.
Despite the fact that the current tax policy puts the years of infrastructure built by crypto unicorns in jeopardy, she claims that the government will continue to tax crypto since investors profit from it.
It would come as no surprise to see entrepreneurs and well-known crypto companies depart India to set up business in crypto-friendly countries with less onerous taxation.
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