Crypto trading volume in India has plummeted after the new tax law went into effect. The new rules impose a flat 30% tax on crypto earnings and do not allow losses to be offset against profits.
New crypto tax rules in effect
The new crypto tax rules came into effect on April 1, after the country’s parliament approved Finance Bill 2022. Crypto earnings are now subject to a flat tax of 30% with no deductions or loss offsets allowed.
On April 1st, crypto exchanges in India started seeing a sharp drop in trading volume. Aditya Singh, who runs the Youtube channel “Crypto India”, Posted Screenshots on Twitter show a sharp drop in trading volume on four major cryptocurrency exchanges in India: Coindcx, Bitbns, Zebpay and Wazirx.
“This is just the beginning of the decline of such a great ecosystem that we had in India,” said Twitter user Shivam Chhuneja commented. “Our government needs to think about tax rules that strengthen the industry and its tax revenues at the same time. Many people make a living from crypto trading.”
India’s Ministry of Finance declared in the Lok Sabha, the lower house of Parliament, last week that “no deduction shall be permitted in respect of expenses (other than acquisition costs) or allowances”. In addition, losses from crypto transactions cannot be offset against profits.
Ashish Singhal, co-founder and CEO of crypto trading platform Coinswitch commented:
A flat 30% tax that does not distinguish short-term capital gains from long-term gains, with no provision for deducting expenses incurred or compensating for losses, is inconsistent with the tax framework for other asset classes and is discriminatory.
Crypto supporters in India have petitioned the government on Change.org to introduce sensible crypto tax policies. At the time of writing, the petition has gained more than 103,000 signers.
On July 1st, another harmful tax regulation comes into effect. A 1% (TDS) withholding tax is levied on crypto transactions. Recently an Indian Member of Parliament explained why this is hurting the crypto industry.
What are your thoughts on how India taxes crypto revenue and transactions? Let us know in the comment section below.
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