Topic: Budget blunders: Income from transfer of digital assets to be taxed at 30% (Read 355 times)

This sums up everything.

https://economictimes.indiatimes.com/tech/technology/crypto-exchanges-to-brief-policymakers-on-tds-tangles/articleshow/89372406.cms

~snip~
If the government wanted to clear doubts around crypto a simpler way was to just tax it as a normal income. By taxing it at the highest slab government itself is creating FUD for the sector. Starting the tax regime of new technology in such a negative fashion discourages the technology a lot. But yes one clarity we have got is that it's not getting banned and that is for sure. Because not only Income tax, the government has plans to bring in GST also on the service charges levied in crypto trading. This means government is ready to collect it's cut of revenue from crypto transactions. If they have thought of these means there is no way a plan to ban them.

PS: 10 year Jail news was horrible LOL I remember writing about it on forum as it was mentioned in the draft bill for Virtual currencies.

Mumbai: The industry body representing cryptocurrency exchanges has decided to reach out to relevant policymakers to brief them about complications arising out of the government’s move to levy a 1% TDS on all crypto transactions.

The issue was discussed at the meeting of the Blockchain and Crypto Assets Council (BACC) on Saturday, where the overwhelming view was that this move would dent crypto trading volumes and drive small traders towards informal Person to Person (P2P) trading and decentralised exchanges (DEX).

Crypto exchanges derive a large chunk of their revenues from traders who frequently trade and pay a small sum on every trade.

According to the provisions of this year’s finance bill, the buyer of a cryptocurrency has to deduct 1% of the sale consideration and pay the amount as an advance tax to the government on behalf of the seller on every trade. The withholding will apply where sale consideration is more than or equal to Rs 50,000 (for specific individual payers) and Rs 10,000 for others. TDS must be deducted on both crypto-to-rupee and crypto-to-crypto swaps.

But people opposed to these provisions say the provisions are impractical and will lead to complications in compliance, thereby discouraging trading on formal exchanges.

For instance, to pay advance tax, the buyer needs to have details of the seller, such as name, PAN number, etc. As this information lies with the exchanges, not with the buyer, the buyer won't be able to remit money to the government.

No Clarity on Implementation

Moreover, day traders make multiple trades per day, often with small margins. Therefore, the volume of the TDS payouts could be substantial and also considerable time would need to be devoted to this exercise.

“Specific sections regarding TDS are still confusing. We believe multiple discussions are needed to come up with better systems or processes. We are very hopeful that the right actions will be taken,” said Sumit Gupta, CEO & cofounder, CoinDCX, one of India’s largest crypto exchanges. “We are happy that the industry has got clarity and confidence. However, I would also like to point out that it's two steps forward and one step back.”

Tax experts say that the government hasn’t thought through the tax proposals and hasn't consulted enough with the crypto stakeholders.

“The government has come up with tax regulations but has not clarified how to implement them. The way TDS regulations stand currently, it could severely dent crypto trading in India,” said Anoush Bhasin, founder of New Delhi based cryptocurrency tax advisory Quagmire Consulting.

The crypto community believes that policymakers should interact more with all the stakeholders—exchanges, market participants and tax experts—to understand the pain points of the industry.

“There were a lot of positives for the crypto industry in the budget. We believe the government has taken a step towards recognising digital assets. But the government should also look into the operations side of the exchanges to understand the impact,” said Atulya Bhat, CMO, BuyUcoin.

BACC plans to hold several knowledge sessions for policymakers to apprise them about the workings of the exchanges and how the taxes will impact their revenue models.

In their meeting, the BACC members discussed all details of the new crypto tax regime.

The crypto investor community has also been up in arms against the 30% tax on crypto currencies announced by FM Nirmala Sitharaman in the Budget.

“The thumb rule in taxation has always been to tax citizens as per their income. The rich end up paying more taxes than the poor. In this case, both are being treated in the same way. Imagine the rich, who are already in the 30% income bracket, won't have much of a problem, but consider the small investor who has invested less than Rs 50,000. Also, there were many people who were earning their income as freelancers, now they will be taxed at a flat 30%,” said Kashif Raza, founder, Bitinning, a crypto education platform.

During the last three days, the hashtags #reducecryptotax and #faircryptotax have been trending on Twitter. By Saturday evening, more than 63,000 people had signed the petition started by popular crypto influencer Aditya Singh and amplified by popular social media influencers like Sandeep Bahuguna, Pushpendra Singh and Kashif Raza.

Hardly a blunder IMO, may be a bit hasty decision but not blunder by any means. Considering every tom-dick-harry was filing PIL after PIL to ban or even news of 10 years jail time were popping here n there, not to mention virtually every media house, print media was busy on creating fud.

I guess it would be too early to comment on future of crypto startup but with recent announcement they indirectly endorsed the crypto.

First crypto community was fighting for "India wants crypto" now focus should be on crypto tax. Its a tiring process but future does look good.

As mentioned, it's definitely a great blunder, not only because the government has taxed cryptocurrency at 30%, they are also not allowing to set off your losses in cryptocurrency, as mentioned by JSRAW, they have considered crypto income more like casual incomes made from Gambling, betting, lottery. This means it's clear they are not giving it the status of an organized market. Moreover this decision has ensured that there won't be any crypto startups in this country moving forward.

State-specific laws are merely for organizing gambling, taxation is handled centrally only, they are treating the incomes from crypto as gambling, not treating the crypto trading as gambling altogether.

In that case they should follow state specific gambling laws since the government has told the states to imply their on rules for gambling.

.. U knw almost 80% politicians are in crypto. Nothing to wry.

I think they are considering crypto as similar to gambling, not stock trading but betting kind.

At some point they will have to reduce the taxation because it's totally unfair that they are taxing 30% for crypto gains while 15% - 20% on stock gains.

What about those people who are doing jobs to earn crypto and services that are using crypto ?
There's just too many uncertainties.

I am not worried about 30% taxation. Rather I am happy that India government is finally recognizing cryptocurrencies despite the huge pressure from Banking lobby.

Also, please understand the calculation of 30% taxation,

You invested on 1 Jan 2022: 1000 INR
You sold on 30 March 2022 at: 5000 INR
Your profit: 4000 INR
Tax liability: 1200 INR

Now Indian crypto exchanges will have to bring in systems that can recognize this pattern and generate a capital gain statement for each investors.

However, it is a proposal and now it will be formulated and made a law through government notification. As far as I know, this is not going to take effect from this FY.