The new crypto tax rules came into effect on Monday, April 1, 2022.
Many crypto investors sold off their holdings on the previous day, March 31, 2022, i.e. the last day of Financial Year 2021-22.
Multinational fintech firm, FIS was quoted by Business Today that under the prevailing laws, crypto as an asset class has become less attractive in India.
“Crypto as an asset class has definitely become less attractive and there is a broad consensus that current holders and investors would sell, given the tax regime announced for virtual digital assets. However, HNW investors who are already in the 30 per cent tax bracket may look at this scenario a little differently especially if they are betting on windfall gains on the back of how large crypto markets recognize and regulate crypto during FY22.”Harish Prasad, Head of Banking at FIS
Prasad also explained that there is a growing segment of people who wish to acquire crypto only to participate in the Web3 ecosystem. They may need to come up with some strategies to manage their holdings.
“India’s movement in the crypto market have largely been factored by global markets in my view, and the moves of the global market will now depend on global dynamics around demand and how large global markets regulate crypto,” he noted.
The industry is not much concerned about the 30% tax. Rather, it is the TDS provision that mandates a 1% tax to be charged on every transaction beyond a certain limit.
TDS will begin on July 1. Till then, frequent traders can transact without much hassle.
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