Even after criticism from the stakeholders and lawmakers, proposed crypto tax provisions were passed in the Parliament.
Since February 1 when India’s Finance Minister, Ms. Nirmala Sitharaman, the crypto community of the country has been rallying against it.
The contentious tax provisions were passed on Friday after a heated debate between the Government and the opposition.
While INC, Member of Parliament (MP), Mr. Gaurav Gogoi urged the Government to clearly state its stance on crypto, other lawmakers either criticized the tax laws or supported them outrightly.
Opponents of Crypto
On the other hand, BJP MP from Godda, Jharkhand, Dr. Nishikant Dubey believes that crypto runs on the dark web and is used for illicit activities such as bribing, buying drugs, money laundering, etc.
He even went on to say that since crypto is not controlled by a sovereign nation or central bank, it will be banned sooner or later. It is a threat to the economy, according to him.
NCP MP from Baramati, Ms. Supriya Sule also asked the Government that if crypto is not good for the country, why can’t it be banned. She called for a ban as it is the right course of action if crypto is harmful to the country.
The proposed tax regime was criticized by her on the grounds that it will not deter people from adopting crypto. She also pointed out that the Government does not collect data about crypto. How is it then the Government imposing taxes on it?
Proponents of Crypto
There were some members who spoke in favour of the industry.
One of them is BJD MP from Puri, Mr. Pinaki Misra who believes that “to ban crypto is equivalent to banning internet. It is an idea whose time has come.”
He also raised the industry’s argument that TDS be reduced to 0.01% to make it feasible for the investors.
Moreover, he urged the Government to take the help of professionals in drafting the crypto bill.
The other crypto proponent is BSP MP from Ambedkar Nagar, Mr. Ritesh Pandey who advocated the industry and opined that India can lead the global crypto market.
Mr. Pandey also explained the implications of the tax regime on Decentralized Finance (DeFi). Further, he debunked the notion that Web3 is just about cryptocurrencies. It is a lot more than that.
Finance Minister’s Take
Ms. Sitharaman reiterated that consultations on regulations are going on. Till then, Government has decided to tax it.
Ultimately the Finance Bill 2022 was passed.
New Crypto Tax Provisions
So, from April 1, a tax of 30% will be levied on crypto gains.
On every transaction will 1% Tax Deduction at Source (TDS) will also be charged. Any transaction higher than the value of INR 10,000 will be subject to TDS beginning from July 1.
Other than the income tax, GST will also be applicable. Investors transacting on foreign-based crypto exchanges will have to pay GST in India on reverse charge basis.
While calculating the tax amount on income from the transfer of Virtual Digital Asset (VDA), no deduction in respect of any expenditure (other than the cost of acquisition) or allowance is allowed.
Moreover, the infrastructure costs incurred in the mining of VDA will not be treated as the cost of acquisition as same as capital expenditure, which is not allowable as deduction.
No deduction in respect of any expenditure shall be allowed, except the cost of acquisition. So, you may not be able to save taxes on crypto by showing any expenditure upon your net income.
It is clear that the Government is treating crypto assets akin to gambling and betting. That’s why such harsh and deterrent taxes have been imposed on crypto assets. As other countries are slowly opening up to crypto, in future, India may also take a positive stance on crypto.
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Cover Photo Source: Wikimedia
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