New Crypto Tax Penalties Introduced in the Union Budget 2023
Much to the disappointment of the crypto community, the government of India has introduced new tax penalties for non-payment of crypto tax deducted at source (TDS). Finance Minister Nirmala Sitharaman did not include crypto in her Union Budget 2023 presentation. Cryptocurrency income is still taxed at 30% with a 1% TDS.
No Tax Relief for the Crypto Community in India
The
Finance Minister of India, Nirmala Sitharaman, presented the Union Budget 2023
in Parliament on Wednesday, a day after she presented the Economic Survey
Report 2022–2023, which called for a global approach to crypto
regulation.
No tax relief was provided to the Indian crypto community, as Sitharaman failed to
include crypto during her budget speech. Many Indian
crypto community leaders took to Twitter to voice their concerns after the speech. Neeraj
Khandelwal, the co-founder of the crypto exchange Coindcx, tweeted:
"No
changes to crypto taxation in India in the budget session. It stands at 1% TDS
and 30% profit. This puts India at a web3 disadvantage for another year."
Sathvik
Vishwanath, CEO of crypto exchange Unocoin, wrote: "There was no
mention of crypto or blockchain in the budget this time. It has been a year
since the announcement of 1% TDS, and we all thought it would affect the
industry. It did! Now we need reviving 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 because
of high taxes and a lack of a solid regulatory framework, which are stifling
progress in the industry."
Amendment to the Income Tax Act Affects Crypto TDS
While
the finance minister did not mention crypto in her budget speech, the Finance
Bill reportedly includes an amendment to the Income Tax Act that
applies to crypto TDS.
Crypto
tax firm Koinx explained on Twitter
that the penalty for failure to deduct or pay crypto TDS includes an amount
equal to the unpaid TDS that will be imposed by a joint commissioner of the I-T
Department. Further, an additional 15% interest per annum will be imposed for
late payments. According to the India
Today publication, failure to pay TDS on crypto transactions can be
punishable by up to seven years of imprisonment.
Ashish
Singhal, co-founder, and CEO of crypto trading platform Coinswitch explained on Twitter:
"The
TDS of 1% for crypto transactions stays. But there is a clarification. The onus
of deducting TDS has been on crypto exchanges or the user (if using P2P or
other means), but until now, there was no penalty for non-deduction."
When
Sitharaman announced the taxation of crypto income at 30% and a TDS of 1% on
crypto transactions last year, crypto trading volumes in India plummeted. The
lack of a regulatory framework for crypto and the Reserve Bank of India’s continued insistence on banning crypto contributes
to the uncertainty that drives crypto
companies and investors away from India. Global crypto exchange Binance does not see India as a viable business destination.
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is your take on the crypto tax penalties imposed by the Indian government?
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