India is killing cryptocurrency
The CEO of cryptocurrency issuer Binance Coin, Changpeng Zhao, warned Thursday that the escalation of Indian authorities would destroy the crypto industry.
CZ said India’s onerous taxation on cryptocurrency transactions is likely to “kill the industry” there.
“India is imposing high taxes, which is likely to kill the industry,” Zhao said in remarks broadcast live during a session at a fintech conference in Singapore on Thursday.
Zhao’s comments add to a string of warnings about the prospects for India’s crypto industry, after the government introduced a tax package this year that caused trading volumes to evaporate.
Instead of introducing blanket regulations, India chose to levy heavy taxation on capital gains and transactions to shrink business.
ZebPay CEO Avinash Shekhar said last month that ZebPay, one of India’s oldest cryptocurrency exchanges, is looking to grow abroad.
ZebPay’s CEO added that the 1% transaction tax “must come down, or things won’t get better”.
In early February, Indian Finance Minister Nirmala Sitharaman said in her recent budget speech that any income from virtual digital assets would be taxed at 30%.
According to the news, cryptocurrency traders and investors in India started paying a 30% tax on gains starting from April 1st, while the 1% withholding tax (TDS) has been implemented.
JP Mohapatra, Chairman of the Central Board of Direct Taxes (CBDT), said that from April 1, 2022, profits from cryptocurrency and virtual assets in India will pay a 30% tax.
The CBDT chief said the proposed 30% tax on cryptocurrency revenue has been approved by the government and is due to be implemented next month.
Mohapatra said the implementation of the 1% withholding tax (TDS) has been postponed to July 1, which is a tax to be levied on the entire value of the transaction and not just the profit.
The CBDT chief added that the government’s net tax collection rose 48.4% annually to Rs.13.63 crore, the highest volume since the 2018/19 fiscal year.
The new tax is set to include non-fungible tokens (NFTs) after Finance Minister Nirmala Sitharman introduced a 30% income tax on crypto transactions in the 2022 union budget.
Sitharaman also proposed a 1% TDS rate on such transactions to include the digital asset class under a tax regime, a rate that has sparked controversy and many have longed to lower it.
Several cryptocurrency groups have called on the Indian government to reconsider its 1% TDS scheme and asked the minister to reconsider her proposal, lowering it to a 0.01% tax rate instead.
“This tax will have an impact on government revenue forcing investors and those who engage in trade to operate abroad, or have to resort to operating through opaque P2P methods,” IndiaTech CEO Ramesh Kailasam said in the letter.