India's 30% tax on income from digital asset - page 4.

amishmanish

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Quote from: Bttzed03 on February 01, 2022, 11:45:34 PM

30% tax on all income/profit from sale/transfer of Digital Assets

This seems to stem from the belief that most people are in it for speculation. If they can speculate, then they can surely pay the highest tax bracket. This is pretty ridiculous in my opinion. They are targeting the budding market of NFT artists and developers en masse.

Quote from: Bttzed03 on February 01, 2022, 11:45:34 PM

No deductions allowed in the tax computation except the cost of acquisition

That mostly hurts those with a huge portfolio or the exchanges mostly looking to offset their taxes by showing various deductions. This is a signal that if you work in a business that we don't want you to, we can surely punish you in other ways.

Quote from: Bttzed03 on February 01, 2022, 11:45:34 PM

Losses are also non-deductible or cannot be used as an offset against other income

I don't think i understood this well enough to comment. Someone else is welcome to comment.

Quote from: Bttzed03 on February 01, 2022, 11:45:34 PM

1% Tax Deducted at Source (If I understand correctly, it's similar to Withholding Tax)

This one is to create a transaction records of people buying at centralized exchanges like WazirX etc. Every time you make a buy, a 1% deduction will be done by the exchange. This probably creates a source of income as well as accounting about the volume of buys happening on the exchange and in crypto as a whole. Once again, sly and underhanded.

Quote from: Bttzed03 on February 01, 2022, 11:45:34 PM

It seems like they really want to get the most from crypto retail traders and investors because they know that there is a strong demand and a large number of transactions.

Well, Welcome to Modi Inc. Its all plain business and you are here to pay up.

mich

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I think it's great that India has legalized bitcoin. I see this is a great opportunity for Indians to get into the crypto space and take advantage of this amazing revolutionary technology.
Legalization will inevitably have a positive impact on the Indian economy as BTC has created significant wealth for countries with a large percentage of adoption.
It's unfortunate that they’re taxing crypto but I think that it's expected that governments want a piece of the action considering how many citizens around the world have benefited financially.

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Quote from: mindrust on February 06, 2022, 08:36:12 AM

That's the only good news. Even though the rates are pretty harsh, any acknowledgement from the governments is better than getting a direct ban. Maybe later on they will lower 30% to a more humane rate like 20% or something but I don't have high hopes for that right now. After a year or two when things cool off, they'll probably reconsider their decision.

I definitely agree. The bureaucrats wanted a total ban on cryptocurrency and the suggestion from Subhash Chandra Garg (former Finance Secretary of India) was to make possession of cryptocurrency punishable by up to 10 years in prison. The finance minister ignored those recommendations and made crypto legal in India. The tax rate may sound a bit high, but in India capital assets apart from stocks are being taxed at this level. Maybe they will consider lowering the rate in the future, but I am not very concerned. What we needed was legalization, and we got it.

mindrust

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Quote from: Sithara007 on February 05, 2022, 10:26:43 PM

Quote from: Cling18 on February 05, 2022, 11:08:26 AM

I wonder why they don't consider crypto as a currency yet implement a huge percentage of taxation from it. I'm sure that crypto users will suffer from it but still have no choice if the government would implement it. That's how the government would really work over crypto, if they can't regulate crypto, they will tax it.

Very few countries around the world recognize crypto as a currency and even fewer recognize it as a legal tender. And in third world nations such as India. even getting the recognition as a legal digital speculative asset is very difficult. I am glad that despite the 30% tax on profits, the government has legalized it. A lot of old school businessmen, investors and politicians were arguing in favor of the complete ban on crypto. It took a lot of courage from the finance minister to legitimize cryptocurrency despite all such demands.

That's the only good news. Even though the rates are pretty harsh, any acknowledgement from the governments is better than getting a direct ban. Maybe later on they will lower 30% to a more humane rate like 20% or something but I don't have high hopes for that right now. After a year or two when things cool off, they'll probably reconsider their decision.

Sithara007

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Quote from: Cling18 on February 05, 2022, 11:08:26 AM

I wonder why they don't consider crypto as a currency yet implement a huge percentage of taxation from it. I'm sure that crypto users will suffer from it but still have no choice if the government would implement it. That's how the government would really work over crypto, if they can't regulate crypto, they will tax it.

Very few countries around the world recognize crypto as a currency and even fewer recognize it as a legal tender. And in third world nations such as India. even getting the recognition as a legal digital speculative asset is very difficult. I am glad that despite the 30% tax on profits, the government has legalized it. A lot of old school businessmen, investors and politicians were arguing in favor of the complete ban on crypto. It took a lot of courage from the finance minister to legitimize cryptocurrency despite all such demands.

ven7net

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Quote from: Bttzed03 on February 01, 2022, 11:45:34 PM

The proposal by the Indian Finance Prime Minister as announced during the Budget 2022:

30% tax on all income/profit from sale/transfer of Digital Assets
No deductions allowed in the tax computation except the cost of acquisition
Losses are also non-deductible or cannot be used as an offset against other income
1% Tax Deducted at Source (If I understand correctly, it's similar to Withholding Tax)

If you're wondering why they used 'Digital Assets' instead of 'Currency', they do not recognized crypto as a currency. The PM said it only becomes a currency when it is issued by the Central Bank (CBDC) and anything outside it is an Asset.

What are your thoughts on this?

It's a double edge to me. We have the legalization aspect (after so many ban proposals) but the rate looks quite high especially when they lowered the personal income tax rates (for certain income brackets) and the Capital Gains Tax appears lower too. It seems like they really want to get the most from crypto retail traders and investors because they know that there is a strong demand and a large number of transactions.

https://timesofindia.indiatimes.com/business/india-business/30-tax-on-digital-assets-all-you-need-to-know/articleshow/89267925.cms

In order for you to get an exhaustive answer to your question, you need to initially refer to the constitution of the same India, where I am sure, like other countries, there is a provision that states that money, that is, finance, can only be assets issued by the state itself, or the central bank of this state. Based on this, the definitions for cryptocurrencies in India look logical and fit under their laws. As for high taxes on the use of cryptocurrencies, this is certainly bad, but on the other hand, the state also wants to make a profit, which is also logical. I do not think that the decision to completely ban cryptocurrencies in India was the best decision. In any case, if you want to make money legally on cryptocurrencies in India, this offer may well suit you, if not, then you will have to look for another way out.

Bttzed03

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Quote from: Cling18 on February 05, 2022, 11:08:26 AM

I wonder why they don't consider crypto as a currency yet implement a huge percentage of taxation from it.

I already explained the reasoning why it's not a currency to them in the OP. Also, it doesn't have to be classified as such before it could be taxed. Stocks aren't considered as currencies and yet income derived from investment and trading are subjected to tax.

Quote from: Cling18 on February 05, 2022, 11:08:26 AM

That's how the government would really work over crypto, if they can't regulate crypto, they will tax it.

Tax crypto income first, more regulations on centralized exchanges and custodial wallets to follow Wink

Cling18

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I wonder why they don't consider crypto as a currency yet implement a huge percentage of taxation from it. I'm sure that crypto users will suffer from it but still have no choice if the government would implement it. That's how the government would really work over crypto, if they can't regulate crypto, they will tax it.

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Quote from: CryptopreneurBrainboss on February 05, 2022, 09:50:50 AM

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Oh so it's just a proposal and yet I see all over the media that Bitcoin now legal in India with this as focus point, such misinformation.

It's considered as such probably because it was announced by the Indian ~~Prime~~ Finance Minister herself. It's like written in stone already even without the written law as one of the journalist said.

Quote from: Sithara007 on February 04, 2022, 11:07:11 PM

~ The existing tax rate on profits from cryptocurrency is up to 43%, since it is classified as ordinary income.

Was it? The new tax table was further divided into more categories compared to the old one but the max for both was still 30%.

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Quote from: ultrloa on February 02, 2022, 07:22:49 AM

its just a proposal and provably many people who use bitcoin will protest against it since this plan made by their official can really hurt their pockets.

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Oh so it's just a proposal and yet I see all over the media that Bitcoin now legal in India with this as focus point, such misinformation. This isn't better than a ban. The citizens should protest. This is daylight robbery and if this get passed into law it will demoralized many people from getting involved in the cryptocurency space to avoid high taxation. I bet this is exactly the government game plan.

If I was a citizen I'll prefer a ban then we enthusiast looks for other alternative to participate in the industry and this will drive up the peer2peer transaction awareness and volume in the country. Take a look at Nigeria, every opportunity the government get they try convince Nigerian into not getting themselves engage with the industry yet their plans fails. They even tried launching their own so better version;f Bitcoin but failed.

Gyfts

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Anyone that understood government overreach saw this coming, this is a ban by proxy, a 30% tax rate is insane.

Legalization of crypto isn't what's up for a discussion in most countries. It's the overregulation and excessive taxation that forces ordinary and institutional users of crypto to divest into other assets and use traditional fiat currency. I've seen people celebrate that a country hasn't banned crypto, citing a rather innocuous attempt of mere "regulation."

This is what regulation looks like, making crypto unattractive as possible with disproportionate tax rates. I can guarantee you India has a significantly lower effective tax rate on capital gains on any other asset. Crypto coincidentally is the odd one out.

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Quote from: Flyingjack123 on February 05, 2022, 04:46:01 AM

Indian government is always slow to respond properly, India has got highest number of crypto investors in terms of numbers
This step will be a demotivation, and eventually India will never be able to be frontrunner in crypto world.. maybe they will realise it late and then become crypto friendly

They've got a big country so that's to be expected plus India has been like this with crypto for awhile now so I don't think that it's really that big of a deal that we are going to make a fuss about it because I am sure that it's going to be forgotten in a months time if not a year. Also, I am sure that crypto users in India would find a way to make sure that they don't pay those taxes.

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Quote from: Sithara007 on February 04, 2022, 11:07:11 PM

Being a resident of India, I don't understand the criticism that is being directed towards the new proposal. Those who are arguing against it are completely ignorant of the facts. The existing tax rate on profits from cryptocurrency is up to 43%, since it is classified as ordinary income. Now the government has classified profits from crypto as capital gains, and the tax rate has come down to 30%. And this rate is comparable to tax on capital gains from other assets such as gold and real estate. Obviously you can't expect crypto to be taxed at a rate that is equal to that for stocks.

Well, you know more about your country and how your government manages to collect taxes from the people. Eventually, the majority could say that it was too big as they compared it to their respective places/country, and even me. Here in my country, we don't pay that much, not even it surpasses 20% but can't imagine in your place was 30% tax to be collected, even it was just a proposed plan but in the eyes of the majority that seems unacceptable.

Flyingjack123

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Indian government is always slow to respond properly, India has got highest number of crypto investors in terms of numbers
This step will be a demotivation, and eventually India will never be able to be frontrunner in crypto world.. maybe they will realise it late and then become crypto friendly

Sithara007

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Being a resident of India, I don't understand the criticism that is being directed towards the new proposal. Those who are arguing against it are completely ignorant of the facts. The existing tax rate on profits from cryptocurrency is up to 43%, since it is classified as ordinary income. Now the government has classified profits from crypto as capital gains, and the tax rate has come down to 30%. And this rate is comparable to tax on capital gains from other assets such as gold and real estate. Obviously you can't expect crypto to be taxed at a rate that is equal to that for stocks.

Distinctin

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That's like a robbery, and considering it's taken from the income of sale, it only says to discourage the use of digital assets like bitcoin. Well, maybe it will also result to an understatement of sales, but if the government is very strict in implementing then people who would prefer a digital asset has no choice but to comply with the law.

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Quote from: The Cryptovator on February 04, 2022, 03:03:05 PM

The Tax is ridiculous to me, it will encourage trading crypto in the black market. So the government will lose Tax. We know citizens' behavior, they will fund some way to skip Tax. Likely they will use the decentralized and non-custodial wallet to store and trade cryptocurrency. We have to keep in mind, a centralized organization like the government will not give you many facilities to use cryptocurrency since it's decentralized. The president describe what he understood, it's not about all that a president should have depth knowledge about cryptocurrencies. That's why he is calling it a digital asset.

Neither they havent realized that on which the step they had made is totally opposing on what they are trying to achieve which is mostly in talks of taxation.. 30% is totally that absurd
and if they are trying to suppress those services around via doing this upscaling the tax then it would really just result into more engagement on black market or be done
underground which the thing you have said is true on where people would tend to find out ways and methods on avoiding such fees no matter what the cost.

The Cryptovator

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The Tax is ridiculous to me, it will encourage trading crypto in the black market. So the government will lose Tax. We know citizens' behavior, they will fund some way to skip Tax. Likely they will use the decentralized and non-custodial wallet to store and trade cryptocurrency. We have to keep in mind, a centralized organization like the government will not give you many facilities to use cryptocurrency since it's decentralized. The president describe what he understood, it's not about all that a president should have depth knowledge about cryptocurrencies. That's why he is calling it a digital asset.

fiulpro

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When we talk about the taxation in a country as big as UK even, the government have two kinds of taxation proposed for normal tax payers the tax is 10% and for higher tax payers, it's 20%. Considering the taxation in India, where lies immense poverty, corruption, upheaval of the economics one have to understand how irrational it is to ask people to pay 30%.

30% is not just justifiable, it's actually something that is very wrong, justifying it means justification of corruption in the government. They have to understand that this is supposedly a very important means for some people, eventually government might take the freedom away from them, they might try and also ban it to make room for digital rupee.

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That is definitely straightforward decommissioning strategy of the crypto currencies in India I guess. They simply don’t want their Indian people to go and invest into crypto freely. Or there is another possible way to earn some good bucks from the taxes and let their people use the crypto. In either way government of India seems to be on winning side here. I am just seeing one positive thing here, they have thought this through and trying to win the hearts of their people. I mean this is perfect politics, they neither deny the fact of using crypto nor using it freely. So it’s up to the people of India whether to use the crypto or not. They are allowed to use it but they have to pay good amount of tax for the same. Well played by PM I guess.

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