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India’s Stiff Crypto Tax Legislation Becomes Law
Amendments sought by the crypto industry were not accommodated and the policies will go into effect on April 1.
Harshvardhan
12:35 25th Mar, 2022
Policy

Indians will begin paying a capital gains tax of 30% on crypto transactions in just one week after the nation’s Parliament passed a controversial tax proposal on Friday.

In addition to the capital gains tax, Indians transacting with crypto will also have to pay a 1% tax deducted at source (TDS), and taxes on crypto gifts, with no ability to take deductions for losses. India’s crypto taxation law will now take effect on April 1.

The crypto industry had fought against this bill after the taxes were first proposed in February, supplementing meetings with lawmakers with a change.org petition and an online campaign. There was some hope the capital gains tax or TDS might be eased, but neither happened.

With very little hope of any changes to the law at this point, industry participants are now mulling a Supreme Court challenge.

"The government has not accepted any suggestions of the crypto industry to tone down the crypto taxation but has in fact tightened the taxation rules making it tougher and perhaps, almost impossible for daily traders and the exchanges to conduct activities in India," said Rajat Mittal, a tax counsel in India's Supreme Court advising crypto businesses.

Steering passage of the law through the lower house of the Indian parliament was Finance Minister Nirmala Sitharaman, who introduced the proposal. While the upper house can and did make suggestions, its role in finance legislation in India is minimal.

The opposition members reacted strongly to the bill, calling out the lack of clarity in defining crypto in the bill, with several MPs saying that the crypto taxes will "finish the industry"

Sitharaman responded by saying that "there is no confusing signal" and we "have been very clear that consultations are going on as to whether we want to regulate it to some extent or really very much or totally ban it." She said that till then the government is taxing crypto as people are making money from it.

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