Crypto tax policy framework passes India’s parliament despite pushback from lawmakers

A tax framework on cryptocurrencies put forth by India's Finance Minister Nirmala Sitharaman is set to become law in the country after being approved as an amendment to the Finance Bill.

On Friday, the lower house of India's parliament, the Lok Sabha, passed the 2022 Finance Bill, which included 39 amendments proposed by Sitharaman. The Crypto Amendment established a 30% tax targeting digital assets and non-fungible token transactions and did not allow trading loss deductions when calculating income. Additionally, taxpayers in India will have an additional 1% tax deducted at source, or TDS.

According to the proposed new amendment in the Finance bill 2022 to the crypto tax sections.

The loss cannot be offset by any gain. Similar to betting tax rules. #reducecryptotax

— Aditya Singh (@CryptooAdy) March 25, 2022

Under the framework, those who conduct crypto transactions will be subject to a 30% tax from April 1, while the 1% tax-deducted-at-source requirement will take effect on July 1. The proposed framework was also rejected by many Indian lawmakers in parliament. as local industry leaders who claimed the legislation would likely "kill cryptocurrency" in the country.

"What does a 1% TDS do to the blockchain business?" order Member of Parliament Ritesh Pandey. “It is critical to understand that what the finance minister has done by introducing this 1% TDS into the blockchain industry, is going to hamper the way this business is done.”

Pinaki Misra, another member of the Lok Sabha, aggregate:

“Today, banning cryptocurrencies is the equivalent of banning the Internet. It is an idea whose time has come. [...] the government has gone to 30% [tax] on the grounds that it should be at a higher level [capital gains tax] because it is a kind of sin.”

#India
Finance Bill 2022 passed.

(for now) solved #crypto Law :

30% tax on crypto, #NFT Profits
1% TDS
No inter-crypto clearing, handover
No expense deductions, mining expense claim

(No clarity yet on foreign participation/DeFi/ICO launched in India, bank support)

— Varun | Blockchain Lawyer (@Blockchainlaw91) March 25, 2022

With the addition of tax policy on cryptocurrencies, India has one of its first regulatory frameworks on digital assets following a 2020 decision by the country's Supreme Court, which lifted a ban by the Reserve Bank of India on dealing with digital assets. banks with cryptocurrency companies. Appealing to the high court would likely be one of the few legal avenues available for opponents of the recently approved framework to seek a reversal.

“We strongly believe there is a need to regulate and tax cryptocurrencies, but in its current form, it is poised to do more harm than good,” said WazirX founder and CEO Nischal Shetty. “It may result in cascading participation in Indian exchanges adhering to KYC standards and leading to an increase in capital outflow to foreign or non-KYC compliant exchanges. This is not conducive to the government or the India's crypto ecosystem."

Related: India's crypto tax provides little legal clarity for traders and exchanges

a bill that proposed to ban "private cryptocurrencies" in India it had previously been mentioned in parliamentary affairs. However, the government body is not scheduled to hear a discussion of the legislation during its current session, which ends on April 8.