The Indian government has introduced new fines for crypto tax, including for non-payment of deducted at source (TDS) crypto tax. Much to the disappointment of the crypto community, Finance Minister Nirmala Sitharaman did not mention crypto in her budget speech this year. Crypto income remains taxed at 30%, while TDS remains at 1%.
No Crypto Tax Relief in India
India’s Finance Minister Nirmala Sitharaman introduced the 2023 Union Budget in parliament on Wednesday, a day after launching this year’s Economic Survey, which highlighted the need for “a common approach to regulating the ecosystem cryptographic”.
Much to the disappointment of the Indian crypto community, Sitharaman did not mention cryptocurrencies during his budget speech. After his speech, many Indian cryptocurrency advocates took to Twitter to express their views on him. Neeraj Khandelwal, co-founder of cryptocurrency exchange Coindcx, tweeted:
There are no changes to crypto taxes in India in the budget session. It stands at 1% TDS and 30% on benefits. 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’s been a year since the 1% TDS announcement was made and we all thought it would affect the industry. Did! Now we need to revive amendments.”
Rajagopal Menon, Vice President of crypto exchange Wazirx, opined: “The Indian Union Budget 2023 made no changes to existing crypto taxes, leaving Indian crypto companies on the Stairway to Heaven. There is lingering uncertainty due to high taxes and a lack of a strong regulatory framework that are stifling progress in the industry.”
Indian Government Introduces Crypto Tax Penalties
While the finance minister did not mention cryptocurrencies in her budget speech, the finance bill reportedly includes an amendment to the Income Tax Law that applies to crypto TDS.
Koinx Crypto Tax Company explained on Twitter that the penalty for failing to deduct or pay crypto TDS includes an amount equal to unpaid TDS to be imposed by a joint commissioner, noting that late payments will be assessed interest at 15% per annum. According India todayfailure to pay TDS on crypto transactions can land one in jail for up to seven years.
Ashish Singhal, co-founder and CEO of cryptocurrency trading platform Coinswitch, detailed on Twitter:
The 1% TDS for crypto transactions remains as is. But there is a clarification. The onus for deducting TDS has fallen on the crypto exchanges or the user (if using P2P or other means), but until now, there was no penalty for not deducting.
When Sitharaman announced 30% taxation of crypto income and 1% TDS on crypto transactions last year, crypto trading volumes in India plummeted. The lack of a regulatory framework for cryptocurrencies and the central bank’s ongoing cryptocurrency ban proposal contribute to the uncertainty that is driving cryptocurrency businesses and investors away from India. The Binance cryptocurrency exchange, for example, does not see India as a viable business opportunity.
What do you think about the crypto tax fines imposed by the Indian government? Let us know in the comments section.
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