Indian Crypto Enthusiasts Seek Reassessment of New Crypto Taxes

Crypto fever across the Indian subcontinent seems to be taking over in full swing as a tussle between investors and the Indian government ensues.

Recently, the representatives of India’s cryptocurrency industry have appealed to the government to re-examine the budget proposal to impose a tax deducted at source (TDS), on cryptos, citing it will be difficult to comply with.

The Tussle Continues

As reported by Indian media organizations, a meeting was held on Friday and was supposedly the first interaction between the crypto industry and policymakers since the finance minister Nirmala Sitharaman announced crypto taxation policies during the national budget speech on February 1.

Reportedly, representatives from at least one major exchange held an unofficial consultation with a senior finance ministry official who was present at the meeting.

Furthermore, it was revealed that the industry urged the government to reconsider the decision of 30% tax on current market value when crypto-assets are gifted or given to employees as part of their remuneration, saying the tax is levied without waiting for the receiver to sell it and book any profit.

That said, industry experts have also sought clarity on transactions with residents of a country with which India has a double taxation avoidance agreement. It is notable that efforts from the industry to get the taxes reduced had been on for a while in India, as reported earlier. 

Crypto Industry Heads Stepping In

It came to light that senior leadership from Indian crypto exchanges sought a review of the 1% TDS on all crypto transactions, saying it was not feasible and difficult to comply with.

For now, it seems like the finance ministry officials are still assessing the concerns and legitimacy of crypto assets. 

In hindsight, it should be noted that the Indian government has already announced the release of the nation’s own digital currency, the ‘Digital Rupee.’ This move too, has left Indian nationals wondering about the how’s and when’s of its implications.

Apart from the 1% TDS, local exchanges are also concerned about the 30% tax on all crypto investment gains. However, the reduction of the tax rate is a secondary priority, according to experts. 

That said, in interviews given to local media crypto industry officials were quoted as saying:

“They are not banning crypto but killing it with tax compliance. TDS is technically not feasible as tracking down identity becomes difficult.”

It has also been reported that Indian exchanges are set to frame a formal and detailed proposal with the help of the industry body, Blockchain and Crypto Assets Council (BACC), and the big four auditing firms, led by EY. 

For now, there seems to be a lack of clarity around the way forward for Indian crypto enthusiasts. Nonetheless, as reported earlier, many consider the crypto taxes as a blessing in disguise since it means that the government is acknowledging cryptocurrencies as an asset class.

That said, at press time the global crypto market cap was at $1.78 trillion noting, a 5.52% decrease over the last day.