After the clarification from the minister of state for finance in Lok Sabha regarding the taxation on virtual digital assets (VDA), India’s crypto industry has come out strongly against the proposed rules. As per the written reply in response to a question in Lok Sabha, the finance ministry has stated that the loss from the transfer of one VDA will not be offset (deduced) against the income from the transfer of another VDA. In addition, under the new provisions to the Income Tax Act, the infrastructure costs incurred in mining of VDA will not be treated as cost of acquisition and, hence, will not be liable to the tax deductions.
The new crypto tax rules will come into effect on April 1, 2022.
Meanwhile , the cryptocurrency industry has unequivocally criticised the new clarifications terming them as unfair which will impact the industry badly.
CoinDCX’s co-founder and CEO, Sumit Gupta said in a tweet that countries across the globe are adopting a pro-crypto approach so they can become crypto hubs and can enjoy the advantage.
“India has immense potential to become a leader in the #crypto space but 30 per cent taxation may affect our chances by discouraging adoption and innovation,” he tweeted on Monday.
Countries across the globe are adopting a pro-crypto approach so they become crypto hubs and get the advantage— Sumit Gupta (CoinDCX) (@smtgpt) March 21, 2022
India has immense potential to become a leader in the #crypto space but 30% taxation may affect our chances by discouraging adoption and innovation.#ReduceCryptoTax
CoinSwitch Kuber’s CEO and co-founder, Ashish Singhal also described the new clarifications as regressive, which would discourage the investors.
“This is detrimental for India’s crypto industry and the millions who have invested in this emerging asset class. We fear the lack of provision to offset losses will drive away users from KYC-compliant exchanges and platforms to the underground peer-to-peer grey market, which would defeat the purpose of the tax,” Singhal said in a statement.
“The Budget recognised virtual digital assets (VDAs) as an emerging asset class. Therefore, a natural course of action would have been to progressively bring the regulations at par with other asset classes. Instead, today, with this clarification, we have taken a step backwards. If a regressive provision such as this would have been applicable in equities, it would have discouraged retail investors from participating,” CoinSwitch’s CEO added.
Crypto exchange WazirX’s CEO, Nischal Shetty also echoed the industry concerns over fresh regulations and tweeted: “Looks to be something new that has turned up. Loss incurred in one digital asset cannot be offset against income in another. Government is expecting people to treat each digital asset profit/loss separate. Unfortunate way to look at new tech. Unbelievable. Hope they change this.”
Looks to be something new that has turned up— Nischal (Shardeum) ⚡️ (@NischalShetty) March 21, 2022
Loss incurred in one digital asset cannot be offset against income in another
Government is expecting people to treat each digital asset profit/loss separate
Unfortunate way to look at new tech
Unbelievable. Hope they change this pic.twitter.com/MShN5twou0
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