According to the CBDT chairman, the Indian government had approved of this 30% tax proposal, and it will come into effect next month.
However, they will have to push back the implementation of the 1% tax deducted at source (TDS) until July 1.
“Today’s income tax collection of Rs 13.63 lakh crore is expected to rise further till March 30. Our gross & net collections in the last five years and the history of the tax department are optimal. Our gross numbers have crossed Rs 15 lakh, which we could never touch earlier,” Mohapatra said.
He also explained that the government net tax collections had increased 48.4% annually, to Rs 14.63 lakh crore. This is the highest number since 2018-19.
Nirmala Sitharman, Finance Minister of India, was the one to propose a 30% income tax on cryptocurrency transactions in the 2022 Union Budget. Following his suggestion, India now becomes one of the few nations to tax cryptocurrencies and digital assets, including non-fungible tokens (NFTs)
Sitharman also initiated the 1% TDS on crypto transactions to include the asset class under Indian tax regime.
She announced that the Finance Ministry would collect tax on cryptocurrencies, even the NFTs, which are becoming more and more popular in India.
“No deduction in respect of any expenditure or allowance shall be allowed while computing such income except the acquisition cost,” Sitharaman said in late January. “ Further, loss from the transfer of virtual digital assets cannot be set off against any other income.”
Reaction from crypto groups
In response to this new regulation, several cryptocurrency groups have reached out to the Indian government, urging it to reconsider the 1% TDS plan.
The Blockchain and Crypto Assets Council (BACC) said the government should lower the TDS to 0.01%.
IndiaTech also wrote a letter to Nirmala Sitharaman and revenue secretary Tarun Bajaj, supporting the recommendation from BACC.
“If the intent of the proposals was to seek additional revenues from such crypto assets, then the 1% tax on the entire transaction value will render the business unviable, thereby having an impact on government revenues forcing investors and those engaging in trade to operate overseas, or be forced to resort to operating through opaque P2P methods,” IndiaTech Chief Executive Rameesh Kailasam wrote in the letter.
