India’s 30% Proposed Digital Asset Tax is Positive, says CoinSwitch CEO

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Written on Feb 3, 2022

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The 30% tax proposition is on all income from digital asset transfers without the allowance of deductions.
Per Singhal, the taxation is a positive sign that the government recognises the impact of India’s crypto space
India intends on incorporating a tax deduction of 1% on transfers of virtual assets, at the source.

At 30%, India’s tax rate on income from digital assets is unarguably steep. Ashish Singhal, the Chief Executive Officer and founder of CoinSwitch told CNBC in an interview that this proposed legislation was a good development.

Two days ago, India’s Finance Minister, Nirmala Sitharaman made this taxation proposition in a speech on India’s annual budget. Sitharaman highlighted the “phenomenal increase in transactions in virtual digital assets”. The minister also indicated that no deductions would be allowed and that transactions attracting financial loss would not be offset by digital asset income or any other.

Though CoinSwitch’s CEO, Singhal expressed that the 30% tax proposition seemed a bit steep, he noted that this was still a development in the right direction for India’s cryptocurrency industry. Singhal stated that this was a sign of progress.

On Street Signs Asia, Singhal stated that the Blockchain and Crypto Assets Council would collaborate with the government in the long term to ensure parity of tax for crypto earnings in relation to other asset classes. Singhal added,

What this signals is that government recognizes this industry and hopefully the crypto bill would address the legality of this ecosystem as well.

The CEO noted that the government’s approach was clever as it created a distinction between two different currency uses case:

What the government has done very smartly is to separate the currency use case of crypto to the asset class use case of crypto… And then, they have recognized crypto assets as an asset class in itself. So that is a big move in my opinion in legitimizing the asset-class use case, the investment use case of crypto

In November 2022, a bulletin from the nation’s parliament caused widespread concern and panic when it indicated that the Indian government planned to ban most private crypto and create a framework for a government-issued digital currency. Later, local news houses reported that the authorities had instead opted to regulate the cryptocurrency industry instead of completely banning it. However, according to media reports, this proposed bill has not yet been presented, nor was it placed among the legislation slated to be discussed in the current session.