India approves 30% tax on capital gains from bitcoin and cryptocurrencies
India’s parliament passed on Thursday a tax reform law that includes a 30% tax on capital gains from bitcoin and cryptocurrencies. The new guidelines will take effect next Friday (April 1), according to a Coindesk publication.
In addition to the capital gains tax, Indians who transact with cryptocurrencies will also be taxed at 1% on their income. This type of tax is similar to the Brazilian Income Tax. In India it is called ‘Tax Deducted at Source’ (TDS).
Also according to Coindesk, players in the crypto sector have tried to persuade lawmakers to ease the 30% tax by attending meetings with the caucuses and publishing several articles on the topic. However, the actions were in vain.
The proposal to tax cryptocurrencies came from Finance Minister Nirmala Sitharaman. Opposition members reacted strongly to the bill, drawing attention to the lack of clarity in the text, with several lawmakers claiming that taxes on cryptocurrencies could wipe out the industry.
According to Forkast, the 30% tax on cryptocurrencies is double the 15% tax on short-term capital gains, which applies to the appreciation of assets like stocks and shares. This, according to the minister, remains unchanged.
For Jaynti Kanani, co-founder of Polygon — who is Indian from the city of Ahmedabad — the time has come for the government of India to start supporting the cryptocurrency industry. And, as unlikely as it sounds, he said, it can start with this new tax law.
While Finance Minister Nirmala Sitharaman has provided clarity on the taxation of cryptocurrencies, the government has yet to introduce legislation to regulate cryptocurrencies.
Since news about the regulation of cryptocurrencies in India began to circulate, there was confusion as to whether it would be a regulation for or against the sector, that is, when taxing it, many thought that Bitcoin, for example, would be considered legal in the country.
If it depends on the country’s central bank, the sector could suffer even more in the future. In February, Reserve Bank of India (RBI) Chairman Shaktikanta Das reiterated his criticism of the industry by stating that cryptocurrencies “a major threat to our macroeconomic and financial stability”.
Also last month, the Advertising Standards Council of India (or ASCI) published guidance covering cryptocurrency advertising after finding that several advertisements “did not adequately report” the risks associated with cryptocurrencies.