As declared by Union Budget 2022-23, Indian cryptocurrency investors will have to pay tax under the new scheme for Taxation of Virtual Digital Assets from April 1. However, the current tax regime is expected to trigger a mass exodus of talent from the country, which faces the risk of missing out on Web 3.0 innovation, says
Priyanka Chaturvedi, a Member of Parliament.
- During the parliamentary proceedings, Chaturvedi said the failure to understand the cryptocurrency industry and Web 3.0, its employment generation capacity, and several other aspects has led the Indian government to impose high taxation while regulation still hangs in limbo.
- Championing the creation of a regulatory framework, the minister stated,
“We are living in the world of web 3.0, either we choose to bite the bullet or we dodge the bullet.”
- Last week, India’s lower house of parliament, the Lok Sabha, passed the much-anticipated 2022 Finance Bill.
- The high tax bracket is a major cause of concern for many novice and small traders. Proposed by Finance Minister Nirmala Sitharaman, the bill included an amendment on crypto that sought to impose a 30% tax targeting digital assets and NFT transactions, equivalent to the tax imposed on gambling and lottery tickets. Meanwhile, there were no provisions for deductions from trading losses while calculating income.
- Indian taxpayers will have an additional 1% tax deducted at source, or TDS. Many experts believe that 1% TDS on each digital asset transfer would eventually dry up liquidity on cryptocurrency exchanges and cause red-tapism.
- The latest comments by Chaturvedi come just a few days after Sushil Kumar Modi, a member of Parliament (MP) from the ruling BJP party, urged the government to consider increasing the capital gains tax on crypto income.
- He said individuals earning in Bitcoin will not get affected by a 30% tax since its compound annual growth rate (CAGR) is while that of Ethereum is 30%.