Indian Government Introduces New Crypto Tax Penalties – Indian Finance Minister Nirmala Sitharaman presented the Union Budget 2023 in parliament Wednesday, one day after she presented this year’s Economic Survey which highlighted the need for “a common approach to regulating the crypto ecosystem.” The Indian crypto community was disappointed as Finance Minister Sitharaman did not address crypto in her Budget speech. This led to various Indian crypto supporters expressing their views on Twitter.
Neeraj Khandelwal, co-founder of crypto exchange Coindcx, tweeted: “No changes to crypto taxation in India in the Budget Session. It stands at 1% TDS and 30% on profits. This puts India at a web3 disadvantage for another year.” Sathvik Vishwanath, CEO of Indian crypto exchange Unocoin, wrote: “There was no mention of crypto or blockchain in the Budget this time. It has been a year since the announcement of 1% TDS was done and we all thought it would affect the industry. It did! Now we need reviving amendments.”
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Rajagopal Menon, vice president of crypto exchange Wazirx, opined: “The Indian Union Budget 2023 made no changes to existing crypto taxes, leaving Indian crypto companies on the Stairway to Heaven. There is lingering uncertainty because of high taxes and a lack of a solid regulatory framework which are stifling progress in the industry.” The Finance Minister did not mention cryptocurrencies in her budget speech, but the Finance Bill proposes an amendment to the Income Tax Act regarding TDS (Tax Deducted at Source) on cryptocurrencies.
Koinx, a crypto tax firm, stated that failing to deduct or pay TDS on crypto transactions can result in a penalty equal to the unpaid TDS imposed by a joint commissioner and a 15% per annum interest on late payments. India Today reports that failure to pay TDS on crypto transactions could lead to a jail term of up to seven years.
Ashish Singhal, co-founder and CEO of crypto trading platform Coinswitch, detailed on Twitter: “The TDS of 1% for crypto transactions remains as it is. But there is a clarification. The onus of deducting TDS has been on crypto exchanges or on the user (if using P2P or other means), but until now, there was no penalty for non-deduction.”
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Last year, when the Finance Minister announced the taxation of cryptocurrency income at 30% and a 1% TDS on crypto transactions, it led to a decline in crypto trading in India. The absence of a clear regulatory framework for cryptocurrencies and the central bank’s proposal to maintain a ban on crypto has contributed to the uncertain environment, causing crypto companies and investors to avoid the country. For instance, Binance, a cryptocurrency exchange, does not consider India a potential market for their business.
