Didn’t see that coming, did you? Well, a lot of investors, traders & other participants in the crypto industry were taken off guard when the conclusive statement was made by the finance minister of India regarding the tax regime on ethereum trader app. The union budget of 2022 was filled with dynamic changes & announcements regarding the prevalence of digital currency in the country. Considering the rampant increase in the users of cryptocurrency across the world, the governments around the world had their respective takes on this prominent topic. Some embraced it with open arms while others remained firm in preventing their citizens from cryptocurrency to curb the illegal activities being conducted under its pretence.
Bitcoin Era explores the intricate details around the taxation system that has been newly introduced in the country. The taxation on crypto gains was inevitable and it is only logical to do what the Indian Government did. Not giving in to the latest trends and maintaining a firm stance against the cryptocurrency’s prevalence, government officials don’t shy away from warning people of the prevailing risks of such unregulated currencies. What does the future of cryptocurrency hold in countries like India where significant taxation on capital gains is a reality? It has become a highly debatable topic in current times.
Capital Gains and Taxation
The process of taxation is still quite ambiguous since it doesn’t clarify some of the predominant areas. But, there is one thing to be kept in mind the process of taxation will be levied according to an individual’s activity along with the treatment that has been embraced by a particular taxpayer. The tax rate will remain unaffected if the income that is generated through an exclusive cryptocurrency transfer is a business income. The recent rates in terms of capital gains are 20% if the capital gain is of long-term nature i.e., 36 months or longer.
On the other hand, the rates will be levied as per each individual if the security is held for less than 36 months. So, it has to be kept in mind before making buying any security and the rates will fluctuate as per individual so that’s another thing to be kept in mind.
Finance Minister Declaration
The Government of India has also proposed that a tax of 30% will be levied on the transfer of digital currency or any cryptocurrency asset. Moreover, the deduction will not be allowed apart from the acquisition cost. However, the government has started to acknowledge cryptocurrency as an asset class along with bringing crypto trading under the purview of legal activity in the country.
In addition to this, such clarification made by the finance minister will hook more people to the government-autopsied crypto trading which will provide a necessary impetus to the overall growth of the industry in the country. This will also facilitate a precise environment for crypto trading that was being conducted on illegal terms earlier.
There is one big shortcoming, however, that the possibility of taking forward the transaction loss in the subsequent financial year will not be entertained by the government. Considering the highly volatile nature of cryptocurrency, it is a quite favorable move for investors. Such announcements were being highly anticipated because the prospects of earning income and registering growth through cryptocurrency are a big deal for the population now.
Will crypto prominence be faded by the tax dominance?
Digital assets have gained significant traction in the country and their popularity continues to sail past consecutive milestones effortlessly. The overall volume of trading has also proliferated significantly over the years. All the efforts that have been channelized to put a firm bridle on the pace that cryptocurrency operates with in the country seem to come with full effect. The government is constantly working towards eliminating all the possible facets that serve as a crypto-magnet for the people. This also comes in the form of a 30% slab of tax rate which will undeniably deter a lot of people from transferring any sort of cryptocurrency in the future.
So watch out for the latest trends to stay updated with the dynamic changes that are inevitable in this landscape.