Rajya Sabha approved the Indian Finance Bill 2022, which includes new 30% crypto tax rules. It will become a law today and take effect on April 1.
Within a week of approval by the lower house (Lok Sabha), the upper house approves the bill.
The Finance Bill was presented during the January budget session 2022-23. The Finance Bill amends tax rules to impose a 30% cryptocurrency tax on digital asset transfers and holdings. Aside from this, traders cannot offset losses against profits. Each trading pair will be treated separately for the tax deduction.
The Finance bill 2022 now includes sections on crypto tax. Profits cannot be offset by losses. Similar to the rules for betting taxes. #reducecryptotax
— Aditya Sing (@CryptooAdy), March 25, 2022
As if 30% tax wasn’t enough, the government also imposed an additional 1% tax deduction (TDS), on every trade. This was in the belief that it would allow them to track funds movements. Exchange operators warned that the 1% TDS could dry up liquidity.
Related: Taxman: India’s latest tax policies could be fatal for the crypto industry
Many traders, experts and exchange operators have scrutinized the bill. The government chose to continue with its regressive approach, without consulting the stakeholders in the crypto ecosystem.
The new crypto tax was also strongly inspired by the tax rules for horse betting and gambling in other countries. This is another reason why the crypto community is outraged. This is a sign that the Indian government views the crypto market as gambling.
“It’s legal to purchase/sell crypto assets in India, but we have taxed it as winnings from horse races.” -T.V Somanathan, India Fin Secretary. It is more than tax. #reducecryptotax #faircryptotax Day-53 #IndiaWantsCrypto @Unocoin
— Sathvik Vishwanath (Unocoin) (@sathvikv) March 26, 2022
India’s new crypto tax policy was approved and finalized in two months. However, the Finance Ministry has yet to provide a regulatory framework for the emerging market despite many years of assurance. Many cryptocurrency entrepreneurs in India believe that it will lead to a talent shortage and that traders will eventually switch to foreign exchanges and other platforms to trade crypto.