- A 30 percent tax law on cryptocurrency has been approved by the upper house of the Indian Parliament.
- The new crypto tax law to come into effect on 1 April 2022.
- The Indian government has also imposed a 1 percent tax deduction at source on each trade to better track the movement of funds.
The new 30 percent cryptocurrency tax bill in India that was added to the 2022 Indian Finance Bill has been approved to become law by the Rajya Sabha, the upper house of the Indian parliament. The law will come into effect starting on the first of April 2022.
The approval of the bill by the upper house parliament comes within just a week the lower house Lok Sabha approved the bill.
The Finance Bill was introduced during the 2022-23 budget session of the parliament in January and amended the tax rules around cryptocurrency to impose a 30 percent tax on digital asset holdings and transfers.
Apart from the 30 percent cryptocurrency tax amendment, cryptocurrency traders cannot offset their losses against their profits and each trading pair will be considered independently for the tax deduction.
Furthermore, the Indian government has also imposed a 1 percent tax deduction at source on each trade. Their reason for this is they believe that it would help the government track the movement of funds. However, exchange providers have warned governments that the 1 percent tax deduction at source would dry up their liquidity.
Although the new cryptocurrency tax policy in India was finalized and approved all within two months, the Finance Ministry is yet to offer a regulatory framework around the cryptocurrency market despite years of assurance.
A majority of the cryptocurrency entrepreneurs in the country believe that the new 30 percent tax law on cryptocurrency will lead to a brain drain of talent and traders who would eventually turn to decentralized exchanges and foreign platforms to conduct their cryptocurrency trade.