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Crypto gains in India will now be subject to a higher tax rate compared to other countries. Starting April 1, 2022, the Indian Finance Bill 2022 will come into effect, with its new 30 percent crypto tax rules.
The Rajya Sabha, the upper house of the Indian parliament, gave its approval to the Indian Finance Bill 2022, according to Cointelegraph. The bill’s approval arrived just within a week after its approval by the Lok Sabha, or the lower house.
The Finance Bill was first introduced in January during the parliament’s budget session 2022–2023. It modified existing tax rules and imposed a 30 percent crypto tax on digital asset holdings as well as transfers.
Aside from the high tax rate for crypto, many investors are discouraged by the inability to offset losses against profits in crypto trading. However, the amended tax rules have been largely welcomed by the country’s crypto community as opposed to the previously circulating rumors that the government might impose an outright ban on crypto.
Many investors are also complaining about the government’s decision to impose a 1 percent tax deduction at source (TDS) for each trade. While the government argued that it will help authorities track fund movements, exchange operators warned that the TDS might dry up liquidity.
Naturally, people are reacting and some are even offering some tips on the best course of action in such a high tax rate environment. “My suggestion to sell off everything applies to those who are in overall profit. That way you can still offset your losses with profits before March 31,” Coin Crunch India founder Naimish Sanghvi tweeted.
“If you’re only in profit, or only in loss across all your investments, then it’s wise to just hold!” he added.
Meanwhile, Nischal Shetty, the founder of one of India's largest crypto exchanges WazirX, believes that the inability to offset losses from profits would hinder the growth of the industry. “Treating profits and losses of each market pair separately will discourage crypto participation and throttle the industry’s growth,” he said. “It’s very unfortunate, and we urge the government to reconsider this.”
