India’s Central Board of Direct Taxes Collects $12 Million in TDS from Crypto Transactions
The Central Board of Direct Taxes (CBDT) in India has collected over 100 crore INR ($12 million) through the implementation of a one percent Tax Deducted at Source (TDS) on crypto transactions. This tax has been in effect since July 1, 2022.
In an interview with ANI, the chairman of the CBDT revealed that they have collected a total of 700 crore INR ($84 million) in TDS during this financial year, including taxes from online gaming companies and crypto transactions. Out of this amount, over 12$ million was collected from taxes on crypto transactions.
However, it’s important to note that this TDS collection does not include the income tax received by the government on the transfer of crypto, which is set at 30 percent.
Tax Imposed After “Phenomenal Increase” in Crypto Transactions
The Indian government has imposed heavy taxes on crypto transactions to control unsupervised adoption of cryptocurrencies in the country. Despite the lack of clear regulations regarding cryptocurrencies in India, the Finance Minister Nirmala Sitharaman announced a one percent TDS on crypto transactions during her 2022-23 Budget speech.
This decision was motivated by the “phenomenal increase” in crypto transactions. Additionally, income from the transfer of any virtual digital asset is taxed at a rate of 30 percent.
The government’s stance on crypto regulations has significantly changed over the past year, shifting from advocating for a complete ban to promoting a global framework for regulation.
India Witnesses Massive Crypto Adoption Despite Heavy Taxes
Despite the heavy taxes imposed by the Indian government, India ranks number 1 in the Chinalysis Global Crypto Index. This index evaluates over 150 countries based on various metrics to determine grassroots adoption of cryptocurrency, with India coming out on top.
Kiran Mysore Vivekananda, the Chief Public Policy Officer at Indian crypto exchange CoinDCX, argues that the government’s purpose of introducing TDS to discourage crypto investments has failed, as there has been a significant rise in crypto adoption in the country.
Hot Take: Heavy Taxes Fail to Deter Crypto Adoption in India
Despite the Indian government’s implementation of heavy taxes on crypto transactions, India continues to witness a massive surge in cryptocurrency adoption. The one percent TDS imposed on crypto transactions and the 30 percent income tax on virtual digital asset transfers have not deterred people from investing in cryptocurrencies.
This highlights the need for clearer regulations and a more balanced approach from the government. It remains to be seen how India will navigate its evolving stance on crypto regulations while ensuring both consumer protection and industry growth.
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