India’s 30% tax on crypto assets to be effected on April 1

The cryptocurrency market in India is about to change with the new taxation framework starting on April 1. Gains made from cryptocurrency transactions will be subjected to the tax set for virtual digital assets.

India’s finance minister, Nirmala Sitharaman, proposed a flat capital gains tax of 30% on all virtual digital assets.

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India crypto tax law to come on April 1

According to the chairman of the Central Board of Direct Taxes, JB Mohapatra, the proposed 30% taxation will apply to income earned on all cryptocurrencies and other virtual assets. The 30% tax will come into effect on April 1. Another 1% tax deductible at source (TDS) will be effected from July 1.

From April 1, cryptocurrency transactions in India will be treated similarly to winnings made from speculative activities.

The government is also tightening any loopholes that could allow people deduct expenses from their profits. The government has said that any cost of mining cryptocurrencies will not be categorized as a tax deduction. The government says that the expenses incurred in setting up mining rigs will be considered capital expenditure and hence cannot be deducted according to the Income Tax Act.

Crypto taxes opposed by the crypto community

The crypto sector has vehemently opposed this tax, and it is calling for amendments. It says that this move will discourage people from investing in the cryptocurrency sector. One of the provisions under this tax provision that have been opposed is treating profits and losses incurred from every trading pair separately.

The CEO of WazirX, the largest cryptocurrency exchange in India, said,

Treating profits and losses of each market pair separately will discourage crypto participation and throttle the industry’s growth. It’s very unfortunate and we urge the government to reconsider this.

The government had earlier said that introducing taxes to crypto trading activities does not necessarily mean that the government was legalizing the crypto sector. towards the end of last year, it was reported that India could ban cryptocurrencies, but this ban never materialized. India is also working on a digital rupee that could give the government control over digital transactions.