crypto tax: Will crypto tax hurt innovation and growth in the emerging segment?

crypto tax: In this year’s budget, the central government imposed a tax on profits from crypto. Apart from this, there is also a plan to levy one percent TDS on crypto transactions from July 1.

crypto tax: The profits from cryptocurrencies over the years have encouraged many people in the country to invest in digital assets. However, in this year’s budget, the central government had taxed the profits from crypto. A tax of 30 percent will have to be paid on all profits from digital assets. Apart from this, the government has also planned to impose a TDS of one percent on crypto transactions from July 1.

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crypto tax: To know about the implications of crypto tax and TDS, Orbital host Akhil Arora spoke to Rajagopal Menon, Vice President of crypto exchange WazirX, and Gaurav Mehta, founder of crypto tax consultancy . As Capital Gains Tax, a crypto tax of 30 percent will be applicable on all profits from crypto assets. It has come into effect from 1st April. However, a TDS of one percent is planned to be levied on all crypto transactions. The government believes that levying TDS will help track crypto-related transactions and prevent tax evasion. This will also make crypto exchanges accountable for collecting taxes on behalf of sellers on their platforms. Crypto exchanges have urged the government to clarify its position on the implementation of TDS and reduce its rate.

crypto tax: Menon said, “TDS of one percent will adversely affect trading as it results in loss of your capital after around 300 trades.” This has already started adversely affecting the crypto trading volumes in the country. Some stakeholders are looking at foreign markets to maintain their earnings from crypto assets.

crypto tax: Regarding this, Mehta said, “With all these regulations, an ecosystem regarding crypto will never be created in the country.” This could also impact innovation in the emerging crypto segment and its associated non-fungible tokens (NFTs). However, along with this, he also said that people were not paying tax on their transactions for the last few years and due to this the government had to bring the rule of TDS. It is the responsibility of the exchanges to help increase the revenue of the government through taxes.

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