On April 1, crypto exchanges in India began seeing sharp declines in trading volumes after the new crypto tax rules came into force which was approved by the country’s parliament. As per the new crypto tax rules a flat tax of 30% now applies to crypto income with no deductions or loss offsets allowed.
Indian Exchanges saw Volume drop after New Crypto tax rules became applicable on 1st April. pic.twitter.com/ay60tR692q
— Aditya Singh (@CryptooAdy) April 2, 2022
A youtuber named Aditya Singh, from the channel “Crypto India,” posted screenshots on Twitter showing a sharp decline in trading volume at four major cryptocurrency exchanges in India: Coindcx, Bitbns, Zebpay, and WazirxWazirx.
“This is just the start of the decline of such a great ecosystem that we had in India,” Twitter user Shivam Chhuneja commented.
This is just the start of the decline of such a great ecosystem that we had in India. Our government must think about taxation rules that bolster the industry and their tax revenue at the same time! Many people earn their living form crypto trading!#reducecryptotax https://t.co/hPn3rfpGae
— Shivam Chhuneja (@shivamchhuneja) April 2, 2022
Crypto supporters in India have petitioned on Change.org for the government to introduce reasonable crypto tax policies. The petition has become one of the most popular on Change.org, but what’s more astonishing is the petition’s rapid growth, the petition has garnered more than 103K signers.
India’s finance ministry explained in Lok Sabha, last week that “no deduction in respect of any expenditure (other than cost of acquisition) or allowance is allowed.” Furthermore, losses from crypto transactions cannot be offset against gains.
Ashish Singhal, co-founder and CEO of CoinSwitch, a Indian crypto exchange commented:
A flat 30% tax that does not differentiate short-term capital gains from long-term gains, with no provision for deducting expenses incurred or offsetting losses is not in tune with the tax framework for other asset classes and is discriminatory.
On July 1, another damaging crypto tax provision will come into effect. A 1% tax deducted at source (TDS) will be imposed on crypto transactions. An Indian parliament member recently explained why this is harmful for the crypto industry.
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