To add to the hefty crypto tax of 30%, the government will begin taxing crypto with an additional 1% TDS starting from today. The already implemented 30% was considered a demotivating factor for the crypto industry in India. To add to that, a 1% TDS will be imposed on every transaction.
In India, even though the country levies a hefty tax on crypto, it is still unregulated. In spite of the fact that the RBI made its move to ban crypto in 2018, the Supreme Court ruled out the decision, leaving crypto on the edge of the cliff.
The government appears to be in an endless discussion about developing a cryptocurrency bill but a comprehensive bill has never been released to the public. As a result of these discussions, the government implemented a hefty 30% tax on cryptocurrencies. The tax that came into effect on April 1, 2022, includes all cryptocurrencies, NFT or similar tokens, and other digital assets as notified by the central government.
The NFTs or other tokens to which the requirements of the Income Tax Act would apply have not yet been informed by the Central Government. Therefore, it may be claimed that no NFTs are now subject to the new tax system, but the tax authorities could decide to tax NFTs under the cryptocurrency head in the future.
The new tax slab doesn’t let taxpayers carry forward their losses. The TDS which will go live today will deduct 1% on each transaction at the source. Also, the current tax system doesn’t classify crypto into any category of currency or a financial asset.
The current situation seems to point to the fact that the country is on a mission to demotivate Indian investors, especially since there is a lack of any other provision, including deductions, to ease the life of investors.