According to the head of India’s Central Board of Direct Taxes, the announcement of a 30% tax for crypto holdings does not necessarily make crypto trading legal in India.
India’s finance minister announced a 30% tax for crypto holdings at the budget session of February 1. This triggered headlines like “India legalizes Crypto” but JB Mohapatra, chief of CBDT, sought to dispel these myths.
In a post-budget presser, Mohaptra stated that the new crypto tax would allow the income tax department to measure the depth of digital currency markets in the country. Mohaptra also stated that the country’s new crypto market is not necessarily legalized by imposing a tax. He explained:
Digital assets to be taxed at 30%. What are digital assets? #Cryptos & #NFTs? #Tax relief for middle class is not possible. Watch JB Mohapatra, Chairman, CBDT and Vivek Johri, Chairman, @[email protected] #BudgetWithETNOW #Budget2022 https://t.co/ZToktkeag7
— ET NOW (@ETNOWlive), February 1, 2022
Chief of tax department added that legality of crypto trade can only be determined if a clear national framework has been established in parliament. He justified the imposition of tax, saying it would allow the department to monitor illicit activity associated with digital assets. He advocated for regulation of the crypto market in order to monitor the money flowing into and out of this digital asset ecosystem.
Related: India will introduce a 30% crypto tax and digital rupee CBDC in 2022-23
Although the Indian government has been working to create crypto regulatory frameworks since 2019, it has only recently introduced a bill. The 30% tax progress was described by some crypto exchange operators as a significant improvement over its initial plans to impose a blanket ban on crypto-related offenses and a jail term.
After being rebuffed by retail market operators, Thailand has withdrawn its 15% tax proposal for crypto transactions. South Korea delayed its 20% tax proposal because of a lack in clarity regarding crypto regulations.