Absurd, Harsh, Regressive: What crypto industry has to say on proposed taxation treatment

moneycontrol.com:

Cryptocurrencies have always had a love-hate relationship with governments globally. The novelty of attaching a value to this asset that has no underlying value, coupled with the immense interest from people everywhere has made cryptos somewhat of a fearsome creature for some governments, while others have seen it as an opportunity.

On March 21, the Indian government clarified that losses incurred in the transfer of one VDA (virtual digital assets) i.e. crypto-assets cannot be set off against income generated against another VDA. Many experts and investors see this as one of those crucial moments just preceding the final act of hostility between India’s nascent crypto ecosystem and its government and a move that will prove detrimental for the industry.

In response to queries posed by MP Karti P Chidambaram, MoS Finance Pankaj Chaudhary answered that “As per the provisions of the proposed section 115BBH to the Income Tax Act, 1961, loss from the transfer of VDA will not be set off against the income arising from transfer of another VDA."

After years of discussions, there is still ambiguity regarding an official Bill to regulate the sector. If the long wait for clarity was not enough, the government slapped a 30 percent tax on gains from cryptocurrencies effective from April 1, 2023, as part of budgetary announcements this year. Additionally, a 1 percent TDS (tax deducted at source) will also be levied to ensure compliance with KYC norms.

This also comes after the government was debating the classification of cryptocurrencies under the GST regime which would mean that the tax, which currently stands at 18 percent and is levied only on financial services offered by crypto exchanges, would also be applicable to the whole value