Indian Finance Committee Reprimands Crypto Advocacy

Zerodha Co-founder Nithin Kamath Warns Indian Investors of Coinbase
  • The 30% Capital gains tax on crypto assets is effective in India from April 2022. 
  • Total estimated realized crypto gains by India in 2021 was $1.85B.

On Wednesday, prominent representatives of the crypto industry met the Indian Parliamentary Standing Committee on Finance (SCOF) in Bengaluru. No significant details of the attendees of this closed and informal meeting were revealed. Discussing the overall regulatory policy over the digital asset sector was the prime objective of the committee.

Computer Emergency Response Team (CERT-in), a crucial wing of the Ministry of Electronics and Information Technology, released a directive for VPN providers and crypto exchanges, urging them to store their user’s data. This directive will eventually be effective from late June.

Conflicting Perspectives

Finance committee disapproves the narrow focus of crypto representatives on “advocacy”. The committee instructed the representatives to divert the tax-related questions to the country’s finance minister. The committee asked the industry representatives to actively address the plans to mitigate cross border terrorism and money laundering. It also asked them to list the names of crypto-related companies that are involved in solving financial problems in India

The recent crypto tax laws imposed by the government are worrisome for the crypto industry. Since April, the capital gains tax imposes a 30% rate on income generated from crypto investments. Government’s emphasis on creating a regulated tax regime threatens Indian traders and investors with fear of losing their assets’ liquidity in the market

The 1% tax deductible at source (TDS), an upcoming crypto tax in July, puts a stern restriction over the transactions of digital assets. For every transaction exceeding $132 USD (10,000 INR), the buyer of the crypto asset will deduct the 1% TDS on behalf of the seller. 

It’s a long-haul battle for the Indian crypto community against the country’s mission of setting up a regulatory regime.