This is what GOI implies with its newest crypto tax policy that is going to be applicable from 1st April 2022. Indian crypto community is super duper fucked. We have banned Bitcoin and Cryptocurrencies in the past several times, I have almost lost the count. During the budget session of 2022, India officially made crypto trading & investment in digital assets legal by proposing a new taxation policy. Crypto is still not a legal tender though. The government has put no thought whatsoever before drafting the policy. It has the potential to kill so many crypto startups and push away investors. Unofficially, we have around 20 million crypto users in the country. We saw around $100 Billion in trading volumes last year. With a bit of regulatory support, we can shine over the world. But what can you expect from a bunch of illiterate, 60-70-year-olds leading the country.
Bullshit Crypto Tax Policy
Ministry of Finance, India has provided clarifications on this new tax policy and how it will affect the folks earning profits or income from Crypto-related activities:
- 30 % Flat Tax On Capital Gains: Anyone who is remotely involved with crypto has to pay a 30% flat tax while cashing out.
- 1% TDS On Every Transaction: TDS (Tax Deducted at Source) will be charged on every dime you spend to invest in crypto. This will be a taxation nightmare for day traders who are going through hundreds of transactions daily. Imagine how much of a burden it will put on exchanges. The majority of this TDS would need to be refunded as Turnover is NOT profit so it's a burden on the government too.
- Offsetting Losses Not Allowed: If you made a loss in one coin, you cannot set it off with profit in another coin. This means that incurring losses is your problem and if you make a profit, share it with the government.
- For Miners: Mining infrastructure cost as a deduction in your profits won't work. Miners will have to pay a flat 30% tax on all of their earnings.
Indian Gov Discouraging Innovation
Blockchain technology is the biggest innovation of the past decade. We are still quite early and the dynamics of this space change every day. Countries around the world are cautious and some of them are slowly moving to regulate this space to support innovation. The Indian government on the other hand is considering Crypto as gambling or betting. It is ridiculous because Blockchain has use cases in every sector. The majority of crypto users are young people and many of them are females too. This new policy will discourage them to build a future in crypto. It will cripple traders and prevent them from trading due to a lack of capital. If you look at the bigger picture, the government will lose a lot on the income tax because the sector will probably die in a year or so with such stupid fucking regulations.
Buidlers Are Going To Build - Brain Drain
India is a technology hub with huge manpower of engineers and computer scientists. We have the talent that could use Blockchain technology and put India at the forefront of this industry. In the past few years, so many exchanges, crypto & blockchain startups & businesses have emerged. Most of them will either close their operations or choose to innovate outside the country. Builders are going to build. These petty regulations won't stop them. Indians should get ready for one of the biggest brain drains in the history of the country. In the next 12 months, we might see many crypto builders moving to crypto-friendly countries. Even if they don't move, they can always start a company in a foreign country that would pay taxes NOT to India.
Personally, I want to build a strong future in Crypto, this will affect me as well since I have made a decent amount of investments in the past year. I will definitely not let our government decide my fate. If it is required I would leave this shithole forever. But remember, not every Indian is not as privileged as me. Nobody likes to leave their homeland. This policy will not only affect Indians but the whole global crypto industry!
What do you guys think? If you are an Indian, what are your plans to combat this situation? Please comment below!