The Indian government has established new fines for non-payment of cryptocurrency taxes and deductions at source (TDS). Much to the disappointment of the crypto sector, Finance Minister Nirmala Sitharaman did not refer to digital assets in this year’s budget speech. Crypto income is taxed at 30% and TDS at 1%.
No Crypto Tax Benefits in India
India’s Finance Minister Nirmala Sitharaman unveiled the Union Budget for 2023 in Parliament on Wednesday, just one day after the release of the current year’s Economic Survey, which highlighted the need for “a unified approach to regulating the cryptographic ecosystem”.
Much to the frustration of the Indian crypto community, Sitharaman made no mention of cryptocurrencies in her fiscal address. After her speech, members of the Indian crypto community took to Twitter to express their thoughts. Neeraj Khandelwal, co-founder of the cryptocurrency exchange Coindcx, tweeted:
There are no changes to crypto taxation in India in the budget. TDS stands at 1% and benefits at 30%. India can have another year of web3 drawback.
Sathvik Vishwanath, CEO of the Indian crypto exchange Unocoin, wrote: “There was no need to make any reference to blockchain or crypto in the budget. It has been more than a year since the 1% TDS announcement, and everyone thought it might affect the industry. It didn’t! Now we need to revive amendments.”
Rajagopal Menon, Vice President of the cryptocurrency exchange Wazirx, opined: “The Indian Union Budget 2023 made no changes to existing cryptocurrency taxes, leaving Indian Crypto firms on the Stairway To Heaven. There is uncertainty due to high taxes and a lack of a strong regulatory framework that could be impeding industry growth.”
Indian Government Introduces Crypto Tax Penalties
Although the Finance Minister did not mention crypto in her budget speech, the Finance Bill reportedly includes an amendment to the Income Tax Act that applies to TDS on crypto. Koinx Crypto Tax Company explained on Twitter that failure to deduct or pay crypto TDS will result in a penalty equal to the unpaid TDS. A Joint Commissioner can impose this amount, noting that late payments are subject to interest charges of 15% per year. According to India Today, one can be imprisoned for up to seven years if they fail to pay TDS on crypto transactions.
Ashish Singhal, co-founder and CEO of the cryptocurrency trading platform Coinswitch, took to Twitter to provide details:
Crypto transactions will continue to be subject to 1% TDS. But there is a clarification. The TDS deduction has fallen on crypto exchanges, or the user (if they use P2P or another method), but until now there was no penalty.
When Sitharaman increased crypto income taxation to 30% and added 1% TDS to crypto transactions last year, Indian crypto activity plummeted. The uncertainty driving away crypto buyers and sellers is due to the lack of a regulatory framework and the ongoing ban proposal by the central bank of India. Even major exchanges like Binance have found India to be an unviable place to do business.
What do you think of the crypto tax penalties imposed by the Indian government? Please let us know in the comments section.
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