The Lok Sabha, the lower house of India’s Parliament, approved the “Finance Act” with contentious amendments relating to the taxation of digital assets. The new rules will come into effect on 1 April 2022, according to The Indian Express.
Earlier The Finance Ministry determined that when calculating taxes, traders would not be able to offset losses in one digital asset against profits in another. The Act also imposes a 30% tax on crypto transactions and a 1% levy under the framework of TDS.
Under Indian law, income tax is collected at source. This means that when making a taxable cryptocurrency transaction, the user will be required to deduct at source the tax (TDS) from the payment amount at the applicable rate and remit these sums to the government.
Industry participants in India had opposed the Finance Ministry’s proposed amendments, hoping to soften the provisions on the TDS and crypto-transaction tax. But Parliament did not heed their views.
Heartfelt thanks and my admiration for you on raising the 1% TDS issue and explaining it so plainly
Thank you @mpriteshpandey 🙏#ReduceCryptoTax #UnfairCryptoTax pic.twitter.com/sv2FjgxKQU
— Nischal (Shardeum) ⚡️ (@NischalShetty) March 25, 2022
According to CoinDesk, industry participants are now considering challenging the decision in the Supreme Court. Tax lawyer Rajat Mittal stressed that the new rules have “made daily trading and exchange operations in India virtually impossible.”
Earlier in February 2022, RBI Governor Shaktikanta Das warned investors against investing in cryptocurrency.