The Indian government has rolled out tougher crypto tax rules, including fines for those who don’t pay TDS on their crypto earnings. Despite the crypto industry’s expectations, Finance Minister Nirmala Sitharaman omitted any reference to crypto in her recent Budget address. Crypto profits are still taxed at a rate of 30% while TDS remains at 1%.
On Wednesday, Indian Finance Minister Nirmala Sitharaman presented the Union Budget 2023 in parliament, following her presentation of the Economic Survey the day before. The survey emphasized the importance of adopting a unified approach to regulating the crypto sector.
The Indian crypto community was disappointed as Sitharaman failed to mention crypto in her Budget address. This led to a wave of reactions from Indian crypto supporters on Twitter, who shared their thoughts on the matter.
Neeraj Khandelwal, the co-founder of crypto exchange Coindcx, tweeted: “No changes to crypto taxation in India in the Budget Session. It stands at 1% TDS and 30% on profits. This puts India at a web3 disadvantage for another year.”
Sathvik Vishwanath, CEO of Indian crypto exchange Unocoin, wrote:
There was no mention of crypto or blockchain in Budget this time. It has been a year since the announcement of 1% TDS was done and we all thought it would affect the industry. It did! Now we need reviving amendments.
Indian Government Introduces Crypto Tax Penalties
While 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 crypto TDS.
Koinx, a crypto tax firm, tweeted about the consequences of not paying crypto TDS. According to them, a joint commissioner can impose a fine equal to the unpaid TDS. Late payments attract a yearly interest of 15%. India Today reported that failure to pay TDS on crypto transactions could result in a jail term of up to seven years.
Ashish Singhal, co-founder, and CEO of crypto trading platform Coinswitch, detailed on Twitter:
The TDS of 1% for crypto transactions remains as it is. But there is a clarification. The onus of deducting TDS has been on crypto exchanges or on the user (if using P2P or other means), but until now, there was no penalty for non-deduction.
Last year, when Sitharaman imposed a 30% tax on crypto income and a 1% TDS on crypto transactions, it resulted in a significant decrease in crypto trading activity in India.
The absence of clear regulations and the central bank’s persistent stance against crypto only add to the uncertainty, causing crypto companies and investors to steer clear of India. This is why major crypto exchanges like Binance view India as a less attractive market.
Johnson Philip is a passionate cryptocurrency enthusiast and writer for CoinSEM.com. He has been following the crypto industry for years, and has a deep understanding of the various technologies and trends driving the market. Johnson has written extensively on topics ranging from blockchain development to ICO analysis and is known for his ability to translate complex technical concepts into easy-to-understand language.