The Rajya Sabha last Thursday approved the 2022 Indian Finance Bill with the new crypto tax rules of 30 percent. The upper house (Rajya Sabha) of the Indian parliament has made the bill into law, and it is effective from 1st April 2022. After the lower house’s (Lok sabha) approval of the bill, the upper house (Rajya sabha) of the parliament approved the bill within one week.
During the budget session of 2022-2023 in January, the Finance Bill, including the crypto laws and taxes, was introduced. In the amended Finance bill, tax rules implied a 30 percent tax on digital assets and crypto holdings as well as transfers. Moreover, every trading pair will be considered independently for deduction of taxes, and the investors, as well as traders, cannot counterbalance their losses against profits.
If the new 30 percent tax imposed on digital assets was not retrogressive enough, the government has also imposed a tax deduction of 1 percent from the source, which is considered TDS on each individual trade and transfer. The government claimed that these levied charges would help them track the movement of the money. But in this regard, the exchange platform operators have warned that these additional charges can dry up the liquidity pool.
Various cryptocurrency experts, exchange operators, and traders have scrutinized this infamous finance bill, but the government has decided to carry forward with this approach without listening to any suggestions from the stakeholders of the crypto industry. Another reason for the outrage of the crypto community is that the new cryptocurrency bill and the levied tax are heavily inspired by India’s horse betting and gambling tax rules, which leads to the fact that the Indian government considers the cryptocurrency market as gambling.
Although the finance ministry has not offered any regulatory framework, the new cryptocurrency tax policy has been approved and finalized within a period of just two months. Most of the crypto entrepreneurs of the country think that this will make people turn towards decentralized exchange platforms and foreign exchange platforms to conduct their crypto operations.