The Indian crypto industry is planning to seek a revision of the rate after the government proposed a 30 percent tax on the sale or purchase of virtual digital assets like cryptocurrencies in its 2022 Union Budget.
A memorandum has been drafted to that effect. The proposal, which will be headed by the Blockchain and Crypto Assets Council (BACC), will take into consideration the various implications of the new tax rules and their impact on the domestic crypto ecosystem and the economy at large.
The Budget also mandated an additional 1 percent TDS to be levied on crypto transactions exceeding a certain limit with the intention of establishing a record trail.
While such a virtual digital gift would be made taxable at the hands of the recipient, any losses incurred during the course of the transaction would not be eligible for a write-off against any other source of income. Except for deductions involving the cost of acquisitions, nothing else would be allowed.
Finance Secretary TV Somanathan had recently mentioned that cryptos are "legal, taxable, though unregulated" in India at present, while also mentioning that taxing these virtual digital assets should not be equated with a stamp of government approval on crypto as a "solid asset class".
While many experts welcomed the taxation move, there are many who expressed disappointment over the steep taxation rates as well. According to Harsh Bhuta, Partner, Bhuta Shah & Co LLP, while the Budget has provided long-awaited clarity on cryptocurrency taxation, it has come at a "steep cost".
An online petition demanding the revision of the new tax rules has also been floating on the internet, created by crypto and blockchain education portal Crypto India Co-Founder Aditya Singh. The petition was further endorsed by Nischal Shetty, Founder, WazirX.
The industry is calling for a more flexible tax regime, treating it at par with other asset classes instead of fixing a singular tax rate.
