India’s Central Board of Direct Taxes (CBDT) has amassed more than 100 crore INR (equivalent to $12 million) through a one percent TDS (Tax Deducted at Source) on cryptocurrency transactions during this fiscal year.
The Indian government introduced a one percent direct tax on all cryptocurrency transactions starting from July 1, 2022.
In an interview with ANI, the chairman of the tax body revealed that they have gathered over 700 crore INR (about $84 million) in TDS during the current fiscal year, with a portion of this amount coming from online gaming companies and cryptocurrency transactions. Specifically, over $12 million was collected from taxes on cryptocurrency.
It’s worth noting that this TDS collection does not encompass income tax imposed by the government on the transfer of cryptocurrencies, which is set at a higher rate of 30 percent.
The Tax Imposition in Response to a Surge in Crypto Transactions Despite the ongoing uncertainty surrounding cryptocurrency regulations in India, the central government has opted for significant taxation measures to regulate the burgeoning cryptocurrency market in the world’s most populous nation.
During the 2022-23 Budget speech, India’s Finance Minister, Nirmala Sitharaman, introduced a one percent TDS on cryptocurrency transactions. She cited the “phenomenal increase” in crypto transactions as the rationale for establishing this specific tax regime. Additionally, she proposed a 30 percent tax on income generated from the transfer of virtual digital assets.
India’s Shifting Stance on Crypto Regulations India’s central government has witnessed a substantial transformation in its approach to cryptocurrency regulations over the past year. They have transitioned from advocating for a complete ban on cryptocurrencies to endorsing the development of a global framework for regulating this nascent industry.
Despite Heavy Taxes, India Experiences Significant Cryptocurrency Adoption India currently holds the top position in the Chinalysis Global Crypto Index. This index assesses over 150 countries based on various criteria to gauge the grassroots adoption of cryptocurrencies. India’s ranking at the forefront of this index underscores the substantial adoption of cryptocurrency within the country.
In an interview with CryptoNews, Kiran Mysore Vivekananda, the Chief Public Policy Officer at the Indian cryptocurrency exchange CoinDCX, argued that the government’s intent behind introducing the TDS tax has not been successful in deterring cryptocurrency investments, given the considerable surge in crypto adoption in the country
