Initially, the Reserve Bank of India was about to ban cryptocurrencies in the country but situations changed right after a supreme court ruling, legitimizing the crypto trade
Now all Virtual Digital Assets come under the Income Tax Act (1961) and are liable for a 30% tax on the profits made by their trade along with an additional 1% of trade volume in TDS
CoinDCX itself has collected 41.33 crores of TDS out of 60.46 crores of overall TDS (Tax Deducted At Source) collected by the government
Sumit Gupta, CEO, CoinDCX and Sourabh Agarwal, Co-Founder, CoinGabbar, have requested the GOI to reduce the TDS to 0.01%
Cryptocurrencies are becoming mainstream day by day with innovative blockchain solutions being embraced by users. Bitcoin and other prominent crypto tokens have become the currency of the internet and their scope only expanding further in the digital space. India has also emerged to be a significant player in blockchain innovation and cryptocurrency investments, however, there is a dire need for awareness about the legal and taxation regarding cryptocurrencies.
If you are someone who actively invests in cryptocurrencies in India, you must know how crypto taxation work in the country. And this CoinGabbar blog is going to elucidate the crypto taxation in India for you. So stay tuned with the article with a calculator to calculate your crypto taxes in India.
Cryptocurrencies are 100% legal assets that are used for the transfer of value from the holder to the receiver. Governments charge a percentage of the total transaction as Tax Deducted at Source from the users. Apart from this, users are also bound to pay an annual Income tax to the government based on the total money they have earned throughout the year, including the crypto trading profits.
Government fixates a specific percentage of the total profits that the investor would have to pay in lieu of the exchange regulations and investors protection mechanisms that governments provide. However, in most countries, cryptocurrencies are not regulated to the extent of taxation but most governments are using unreasonable crypto taxes to demotivate the massive investments in cryptocurrencies.
Initially, the Reserve Bank of India was about to ban cryptocurrencies in the country but situations changed right after a supreme court ruling, legitimizing the crypto trade. Now all Virtual Digital Assets come under the Income Tax Act (1961) and are liable for a 30% tax on the profits made by their trade. Apart from that users are also bound to an additional one percent of TDS for each transaction. The income tax rates for crypto in India are unbelievably high and presently acting as a shadow ban for investors. However, these rates are not supposed to be permanent and are expected to be reduced in the times to come.
Indian investors quickly adapted to cryptocurrencies after the first bull run because of the lucrative returns cryptos had to offer. The number of total investors in crypto crossed the mark of 10 million in no time with local exchanges making crypto transactions accessible for all. However, the number of total investments was increasing at such a rapid pace that the government had to regulate the investments by a shadow ban of 30% tax on crypto profits.
Even though the high taxation limited the crypto investments up to an extent but the long-term players continued funding their portfolios. This is depicted clearly in the latest reports released by the ministry of finance where the total TDS collected by the crypto transactions crossed the mark of 60 crores INR. CoinDCX, India’s leading cryptocurrency exchange, has revealed the astounding numbers of the tax collected by the government of India on crypto transactions.
CoinDCX itself has collected 41.33 crores of TDS out of 60.46 crores of overall TDS (Tax Deducted At Source) collected by the government. That's more than 68% of the total TDS collected by the GOI on crypto transactions. These numbers indicate the sheer trade volume on India's largest crypto exchange, especially in times when crypto is undergoing a severe winter. This news could be a ray of hope for the Indian crypto community that is in the FUD mode right now.
Sumit Gupta, Co-Founder, CoinDCX, while making the official declaration about these numbers, informed the users that CoinDCX has proposed the TDS to be reduced to 0.01% for the better facilitation of Crypto Investors. If that translates to reality, crypto transactions would be much more affordable for retail investors, giving the crypto industry an adequate push to bring back the charm.
The speculations around reducing the crypto taxes on cryptocurrencies are gaining hype as the year is coming to an end. All the crypto stakeholders in the country are hopeful about the proper regulation of the space and its accommodation in the national budget of 2023-2024. The voices around reducing the TDS on crypto transactions are being more vocal and we are expecting that these would be heard by the Indian Ministry of Finance.
CA Sourabh Agrawal, Co-Founder, CoinGabbar raised the same issue on Twitter. While sharing the reports released by CoinDCX Sourabh said,
“Currently as per the Indian government, TDS is applicable @ 1% on VDA Transactions. We appeal Indian Government to reduce this TDS @ 0.01% in the coming Union Budget 2023-24 making the VDA business more competitive”
If TDS is reduced to 0.01% of the total transactions, it would be a significant push for the crypto trade in the nation. The market is already undergoing a deep bearish sentiment and needs support from the regulatory authorities to break the series of continuous red candles.
Cryptocurrencies are the future of digital payments and the Indian government has no doubt about it. India is already testing its retail CBDCs and will soon be launching them for the general masses. The prime minister of the country has also been vocal about the significance of blockchain technology in the future of the nation. However, the future of cryptocurrency in the nation would depend significantly on the reduction of taxes and the government’s will to regulate the space without compromising user privacy.
CoinGabbar is bullish on the future of cryptocurrencies in the country and we are working towards making the space more educated, efficient, and trustable for all.
Keep following CoinGabbar for the latest updates on cryptocurrencies.
