India’s Central Board of Direct Taxes (CBDT) has announced that it has collected more than 100 crore INR ($12 million) from one percent TDS (Tax Deducted at Source) on crypto transactions in the current financial year. This move comes after the Indian government implemented a one percent direct tax on all crypto transactions starting from July 1, 2022.
Significant Tax Collection from Crypto Transactions
In an interview with ANI, the chairman of the tax body stated that they have collected over 700 crore INR ($84 million) in TDS during the current financial year from online gaming companies and crypto transactions. Out of this amount, more than 12$ million was collected from taxes on crypto. However, it is important to note that this TDS collection does not include the income tax received by the government on the transfer of crypto, which stands at 30 percent.
The Indian government’s decision to impose heavy taxes on crypto transactions is an attempt to control the unsupervised adoption of cryptocurrency in the country. While the regulatory landscape for crypto in India remains uncertain, the government has taken steps to discourage its unregulated use.
Changing Stance on Crypto Regulations
In her 2022-23 Budget speech, India’s Finance Minister Nirmala Sitharaman announced the implementation of one percent TDS on crypto transactions. She cited the “phenomenal increase” in crypto transactions as a reason for the introduction of a specific tax regime. Additionally, she proposed a 30 percent tax on income from the transfer of any virtual digital asset.
It is worth noting that the central government of India has experienced a significant shift in its stance on crypto regulations over the past year. Initially, the government called for a complete ban on crypto but has since shifted its approach to promoting a global framework for regulating the nascent industry.
India’s Position in the Global Crypto Index
India has been ranked number one in Chinalysis Global Crypto Index, which evaluated over 150 countries based on various metrics to gauge grassroots adoption of cryptocurrency. This ranking showcases India’s high level of crypto adoption and signifies its growing prominence in the crypto space.
Concerns about the Effectiveness of TDS
Kiran Mysore Vivekananda, Chief Public Policy Officer at Indian crypto exchange CoinDCX, expressed concerns about the government’s implementation of TDS. He argued that the purpose of introducing TDS was to discourage people from investing in cryptocurrencies, which failed to achieve the desired impact due to the significant rise in crypto adoption in the country.
“The government’s purpose of introducing TDS has failed given the massive rise in crypto adoption in the country,” said Kiran Mysore Vivekananda.
