India’s crypto tax is quite different when compared to that of other major economies.
The Budget for Financial Year 2022-23 is the most debated topic among the crypto community members.
It brought the contentious flat 30% tax rate which is being opposed on internet.
Let’s take a look at how India’s new crypto tax regime compares with that of other countries, according to the information sourced from Economic Times.
New Crypto Tax Regime of India
The new crypto tax regime seeks to set aside the present regime of Capital Gains tax.
It introduces a flat 30% tax with a 1% TDS (Tax Deductible at Source) on every transaction beyond a certain threshold.
The community members believe it is detrimental for investors.
This tax stands at par with ones on gambling and lottery.
United States
The US has a Capital Gains tax regime on crypto assets.
Crypto assets are treated similar to stocks; thereby, Capital Gains tax is levied.
It is similar to the present system in India.
Unrealized profits are not taxed.
For assets held under 12 months, the tax slab in the upper marginal tax bracket in which the person’s taxable income falls is applied.
Assets held over 12 months are subject to 0%, 15% or 20% depending on the individual or combined marital income.
United Kingdom
The UK has a similar regime to that of the US.
If an investor ‘dispose’ of cryptocurrency as a personal investment, the investor must pay Capital Gains tax on the profits. The tax-free allowance for Capital Gains tax is £12,300.
‘Disposal’ here means selling tokens for money, exchanging one type of token for another, using tokens to pay for goods or services, and giving away tokens to another person (unless it’s a gift to a spouse or civil partner).
The applicable tax rate is determined by income.
Germany
The European nation has quite a relaxed crypto tax regime. Crypto is not recognized as monetary currency, commodities, or stocks. Rather, crypto is considered private money.
Crypto held over a year is not subject to any taxes regardless of profit or loss. They are not even needed to be declared in the tax return.
If a crypto asset is sold within 12 months, taxes can be levied. Profits up to €600 are tax-free.
But above that threshold taxes will have to be paid on the entire amount.
But businesses have to adhere to a different system. They have to pay corporate income taxes on crypto gains.
Bermuda
Bermuda is a well-known tax haven that does not tax cryptocurrency gains, income, withholding, or other taxes on digital assets, or transactions involving them.
Moreover, it accepts tax payments in crypto.
A clear-cut crypto tax regime is preferred in India as it extricates all the tax-related uncertainties. However, a harsh and demanding regime could prove to be detrimental to the country’s burgeoning crypto industry.
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