Indian crypto tax policy became even more complicated just a week before the new tax laws are set to come into effect. A new parliamentary note answering queries about the new tax policies on virtual digital asset (VDA) suggest that traders can’t offset their losses from one digital asset against profit on another.

As the new tax policy waits for April 1 to come into effect, many experts claim the latest clarification from the government is a death knell for traders. The crypto tax policy of the government expects traders to treat each investment and profit/loss on a digital asset independently.

For example, if a trader invests $100 each in Bitcoin (BTC) and Ether (ETH), and they incur a profit of $100 on Ether and a loss of $100 on Bitcoin, then the trader would have to pay a 30% tax on the profit of Ethereum without accounting for losses on BTC.

WazirX founder Nischal Shetty called the tax policy regressive and “unbelievable,” while hoping the government changes its stance. He told Cointelegraph:

Apart from the latest burden of treating each crypto trading pair independently, the 1% tax deduction at source (TDS) on each transaction is also being criticized by crypto entrepreneurs and especially exchanges, as they believe it would dry up liquidity.

Crypto entrepreneur Naimish Sanghvi suggested that traders should sell everything they have before March 31, 2022, and start fresh from April 2022.

My suggestion to sell off everything applies to those who are in 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

India is yet to finalize a regulatory framework for the