India’s crypto tax law clarification is ‘a step backwards’, says CEO of CoinSwitch
India’s proposed crypto taxation law will take effect on 1 April this year.
Ashish Singhal, the co-founder and CEO of India’s largest crypto exchange CoinSwitch Kuber, says the country’s crypto tax law signals a “step backwards.”
Singhal expressed his disappointment on Monday following clarification from authoirities regarding a crypto tax law that’s set to take effect on 1 April 2022.
India announced its cryptocurrency tax law in February, revealing a 30% tax levy on any digital asset transfer. There was also to be 1% deduction applicable to all crypto payments, with this levied at the source.
While the crypto community pointed out the high taxes, it acknowledged the country’s ‘recognition of cryptocurrencies’. But on Monday, most crypto investors were shocked by the Ministry of Finance’s clarification notice.
According to the ministry, India will look to tax each crypto investment separately, reiterating the fact that gains in one investment cannot be used to offset losses in another. It also specified that infrastructure costs related to crypto mining will not count as cost of acquisition.
It’s “detrimental” to crypto investors
The founder of crypto news platform Coin Crunch India summed the community’s frustrations in his tweet.
If you made loss in Bitcoin, you cannot set it off with profit in Ethereum. The new taxation law was clarified in parliament today.
My suggestion is to sell everything you have before March 31, 2022. And start fresh from April 2022.
Cost of mining cannot be deducted too! pic.twitter.com/pfSGPAOFBO
— Naimish Sanghvi (@ThatNaimish) March 21, 2022
“This is detrimental for India’s crypto industry and the millions who have invested in this emerging asset class,” the CoinSwitch CEO noted of the Finance Bill 2022.
He added that India had “taken a step backwards,” in reference to the February Budget Bill that had “recognised virtual digital assets (VDAs) as an emerging asset class.”
He said he expected the country to have progressively worked towards ensuring crypto regulations were “at par with other asset classes.”
He also opined that such regressive provisions being applied to the equities market would definitely discourage retail investors. It is a scenario he believes could materialise in the burgeoning crypto investment community.
“We fear the lack of provision to offset losses will drive away users from KYC-compliant exchanges and platforms to the underground peer-to-peer grey market, which would defeat the purpose of the tax,” he said.
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