The tax base for cryptocurrencies, introduced by Indian Finance Minister Nirmala Sitharaman, will become law in the country after it is passed as an amendment to the Finance Act.

India’s lower house of parliament, Lok Sabha, passed the 2022 Finance Act on Friday, which included 39 amendments proposed by Sitharaman. The cryptocurrency change created a 30 percent tax on transactions with digital assets and non-fungible tokens and did not allow trade losses to be deducted when calculating income. In addition, taxpayers in India will have an additional deduction for withholding tax of 1%, or TDS.

Under this structure, those who carry out cryptocurrency transactions will be taxed at 30% from 1 April, while 1% tax will be deducted at the source on 1 July. The proposed structure also met with opposition from several Indian lawmakers in parliament. Like local industry leaders who have argued that the legislation is likely to “kill crypto” in the country.

What does 1% TDS do with the blockchain business? asked MP Ritesh Pandey. “It is very important to understand that what the Minister of Finance has done by introducing 1% TDS in the blockchain industry is that it will hinder this work.”

Benaki Mishra, another Lok Sabha member added:

Today, a ban on cryptocurrencies is tantamount to a ban on the Internet. It is an idea whose time has come […] The government went over to 30% [tax] on the grounds that it should be higher [capital gains tax] because it is a kind of sin.

With the addition of a tax policy for cryptocurrencies, India has one of the first regulatory frameworks for digital assets following a 2020 ruling by the country’s Supreme Court that lifted the ban imposed by the Reserve Bank of India on banks operating cryptocurrencies. An appeal to the Supreme Court is likely to be one of the few legal avenues available to opponents of the recently adopted structure to reverse it.

“We firmly believe in the need to regulate and tax cryptocurrencies, but in their current form they have the potential to do more harm than good,” said Nishal Shetty, founder and CEO of WazirX. “This could lead to successive participation in exchanges that comply with Indian KYCs and lead to increased capital flows to foreign exchanges or exchanges that are not compliant with KYC. This does not contribute to the government or crypto ecosystem of India. India.”

Related topics: India’s crypto tax provides little legal clarity to traders and stock exchanges

The bill, which proposed banning “private cryptocurrencies” in India, was mentioned earlier in parliamentary cases. However, the government body does not plan to hear a discussion of the legislation at its current meeting, which ends on 8 April.

Source: CoinTelegraph