- March 25, 2022
- Posted by: Bogdan
- Category: Cryptocurrencies, government, India, Indian Government, regulation, Taxes
A tax framework on cryptocurrencies introduced by India’s Finance Minister Nirmala Sitharaman will become law in the country after being passed as an amendment to the Finance Bill.
India’s lower house of parliament, the Lok Sabha, passed the 2022 Finance Bill on Friday, which included 39 amendments proposed by Sitharaman. The amendment on crypto established a 30% tax targeting digital asset and nonfungible token transactions, which did not allow for deductions from trading losses while calculating income. In addition, taxpayers in India will have an additional 1% tax deducted at source, or TDS.
As per the new amendment proposed in the Finance bill 2022 to sections of crypto tax.
Loss cant be set off against any profit. Similar to betting tax rules. #reducecryptotax
— Aditya Singh (@CryptooAdy) March 25, 2022
Under the framework, those conducting crypto transactions will be subject to a 30% tax starting on April 1, while the 1% tax deducted at source requirement will take effect on July 1. The proposed framework received pushback from many Indian lawmakers in parliament as well as local industry leaders, claiming the legislation would likely “kill crypto” in the country.
“What does a 1% TDS do to the business of the blockchain?” said Member of Parliament Ritesh Pandey. “It is critical to understand that what the finance minister has done by introducing this 1% TDS on the blockchain industry — it is going to hamper the way this business is done.”
Pinaki Misra, another member of the Lok Sabha, added:
“Today to ban cryptocurrency is the equivalent of banning the internet. It is an idea whose time has come […] the government has gone on to a 30% [tax] on the basis that it must be at a higher [capital gains tax] because it is some kind of sin.”
Finance bill 2022 passed.
(For now) settled #crypto Law :
30% tax on crypto, #NFT gains
No inter crypto set off, carry forward
No expense deductions, mining expense claim
(No clarity yet on foreign holding / DeFi / ICO launched in India, banking support)
— Varun | Blockchain Lawyer (@Blockchainlaw91) March 25, 2022
With the addition of the tax policy on crypto, India has one of its first regulatory frameworks on digital assets following a 2020 decision from the country’s supreme court, which lifted a ban from the Reserve Bank of India on banks’ dealing with crypto firms. Appealing to the highest court would likely be one of the few legal paths available for opponents of the newly passed framework to seek a reversal.
A bill which proposed banning “private cryptocurrencies” in India had previosuly been mentioned in the parliamentary business. However, the government body is not scheduled to hear a discussion on the legislation during its current session, which ends April 8.