The Indian Ministry of Finance has determined that when calculating taxes, traders will not be able to offset losses in one digital asset with profits in another.
The tax rate on profits from cryptocurrency trading is 30%. In response to a parliamentary query, the Ministry of Finance clarified that profits and losses from investments in various virtual digital assets should be accounted for separately.
In an interview with Cointelegraph, the founder of the WazirX exchange Nischal Shetty called the proposed tax policy ‘backward and incredible’. Despite the fact that the changes are due to take effect from April 1, he hopes for a reversal by the authorities.
“Calculating profits and losses for each market separately will hinder participation in cryptocurrencies and curb industry growth. This is very regrettable, and we urge the government to reconsider the decision,” he said.
Crypto-entrepreneur Naimish Sanghvi drew attention to another rule: mining costs and other infrastructure expenses will also not be taken into account by the authorities. He advised traders to close all profitable positions by March 31 to offset losses in this way.
My suggestion to sell off everything applies to those who are overall profit. That way you can still offset your losses with profits before March 31.
If you’re only in profit, or only in loss across all your investments, then it’s wise to just hold! https://t.co/4RxKH8xKOT
— Naimish Sanghvi (@ThatNaimish) March 21, 2022
Crypto-entrepreneur Naimish Sanghvi drew attention to another rule: mining costs and other infrastructure expenses will also not be taken into account by the authorities. He advised traders to close all profitable positions by March 31 to offset losses in this way.
Work on the regulatory framework for cryptocurrencies has been under way in the country since 2018. In that time, the public has received from authorities conflicting signals: from a total ban, even with criminal liability, to possible regulation as assets.
The Finance Ministry has made clear that the introduction of taxation does not determine the legal status of virtual currencies — that is the prerogative of the relevant legislation.
Against this backdrop, Aditya Singh, founder of the YouTube channel Crypto India, noted that the government’s tax policy on digital assets aligns with the approach to gambling and lotteries.
Seems like, the idea for crypto tax policy came from here. pic.twitter.com/wuUaWQxU2f
— Aditya Singh (@CryptooAdy) March 16, 2022
In Davos, Indian Prime Minister Narendra Modi urged the development of a single global approach to regulate the industry.