Indian residents will start paying a 30% capital gains tax on cryptocurrency transactions in a week after the country’s Parliament approved a contentious tax measure on Friday.
Along with capital gains taxes, Indians transacting in cryptocurrency will be required to pay a 1% tax deducted at source (TDS) and taxes on crypto gifts, with no deductions for losses. India’s new cryptocurrency tax law will take effect on April 1.
After the taxes were first suggested in February, the crypto sector mobilized against them, augmenting discussions with lawmakers with a change.org petition and an online campaign.
There was considerable expectation that the capital gains or TDS taxes might be reduced, but neither occurred.
With little chance that the law will alter in the near future, industry participants are now considering a Supreme Court challenge.
With little chance that the law will alter in the near future, industry participants are now considering a Supreme Court challenge.
According to Rajat Mittal, a tax counsel in India’s Supreme Court who advises crypto enterprises, the government has not accepted any proposals from the crypto industry to reduce crypto taxation, “but has instead tightened the rules, making it more difficult, if not impossible, for daily traders and exchanges to conduct business in India.”
Finance Minister Nirmala Sitharaman, who introduced the plan, steered the legislation through the lower chamber of the Indian parliament. While the upper house can and has made suggestions, it plays a minor role in Indian financial legislation.
Members of the opposition bloc responded harshly to the proposed legislation, highlighting the lack of clarity in the bill’s definition of cryptocurrency, with numerous MPs stating that the crypto taxes will be detrimental to the crypto sector.
Sitharaman said that “there is no ambiguous signal” and that we “have been quite clear that consultations are underway to determine whether we want to regulate it to some level, significantly, or completely.”
She stated that until then, the government will continue to tax cryptocurrency because of the fact that people are profiting from it.
Image credit: Forkast