Six months on, crypto tax leading to siphoning of India's wealth: Experts
The provision of a 30 per cent tax on the transfer of cryptocurrency has facilitated the siphoning of India's wealth to foreign countries, experts told Business Standard. October 1 will mark six months of the rule's implementation, which finance minister Nirmala Sitharaman introduced in her Budget 2022 announcement.
"Since the imposition of taxes, India has seen a significant decline in trading volume and an exodus of crypto investors to international exchanges based on the belief that these exchanges do not cooperate with Indian authorities, thereby allowing individuals to save 30 per cent in taxes," Gaurav Mehta, founder of Blockchain auditing and taxation startup Catax said.
Apart from a 30 per cent tax, the government also introduced a 1 per cent tax deducted at source (TDS) on each trade where a crypto asset is exchanged for the rupee or another crypto asset. It came into effect on July 1.
"The 1 per cent TDS levied on top of the 30 per cent tax on gains from the transfer of crypto assets, is steeper than the taxation policy of most developed countries like the US and UK," Sumit Gupta, co-founder and CEO at crypto investment platform CoinDCX said.
"While we have been deducting the taxes as per government regulations, the users see this as a loophole in tax enforcement and are taking advantage of this grey area over whether the law applies to international platforms," Gupta added.
The TDS may be a bigger reason for investors to shift to other markets.
"More than the 30 per cent tax, it is the high TDS that has had an impact on crypto. The high TDS has pushed a lot of traders into the grey markets and potentially decentralised exchanges where it is difficult to trace transactions, let alone tax," a spokesperson of
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