India is unlikely to change its restrictive crypto tax rules when Finance Minister Nirmala Sitharaman unveils the country’s new budget on Wednesday, CoinDesk has learned.
The nation’s budget indicates how government resources are allocated and the latest tax rules. Last year, this included stiff taxes on crypto transactions: a 30% tax on profits and a 1% tax deducted at source (TDS) on all transactions for the crypto sector, prompting an uproar from the industry.
The primary demand from the industry and recommendation from policy think tanks is to reduce the TDS to 0.01%, or at minimum to 0.1%.
R. Venkatesh, the head of public policy at CoinSwitch Kuber, said there is a “mismatch between the intent and the actual impact of the TDS with 1% of the capital locked up at every sell transaction.”
The tax is pushing crypto users offshore, undermining the stated government objective of tracing transactions.
Tax cut unlikely
Several individuals closely working in the crypto regulatory space have publicly said they are hopeful for a tax cut but privately opined that it is unlikely.
Rajat Mittal, a crypto tax counsel in India's Supreme Court, said he didn’t expect a tax cut but hoped for it so that investors “are not forced to move assets abroad and tax leakage can be stopped.”
Policy experts such as Subhash Garg, a former secretary in the Finance Ministry’s Department of Economic Affairs and Meghna Bal, a fellow at the Esya Centre said that while reasons for a tax cut exist, the nation has other priorities.
“How can India propose changes or new rules when it has publicly stated the need for global coordination that it’s discussing at ongoing G-20 meetings which will only end in September,” said a person familiar with India’s G-20 work.
India has kept a crypto bill in cold storage since early last year.
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