The Indian government has introduced new crypto tax penalties, including for non-payment of crypto tax deducted at source (TDS). Much to the disappointment of the crypto community, Finance Minister Nirmala Sitharaman did not mention crypto in her Budget speech this year. Crypto income remains taxed at 30% while TDS stays at 1%.
No Crypto Tax Relief in India
Indian Finance Minister Nirmala Sitharaman presented the Union Budget 2023 in parliament Wednesday, one day after she presented this year’s Economic Survey which highlighted the need for “a common approach to regulating the crypto ecosystem.”
Much to the disappointment of the Indian crypto community, Sitharaman made no mention of crypto during her Budget speech. Following her speech, many Indian crypto proponents took to Twitter to voice their opinions. Neeraj Khandelwal, co-founder of crypto exchange Coindcx, tweeted:
No changes to crypto taxation in India in the Budget Session. It stands at 1% TDS and 30% on profits. This puts India at a web3 disadvantage for another year.
Sathvik Vishwanath, CEO of Indian crypto exchange Unocoin, wrote: “There was no mention of crypto or blockchain in Budget this time. It has been a year since the announcement of 1% TDS was done 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.”
Indian Government Introduces Crypto Tax Penalties
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, noting that for late payments, a 15% interest per annum will be imposed. According to India Today, failure to pay TDS on crypto transactions can land one in jail for up to seven years.
Ashish Singhal, co-founder and CEO of crypto trading platform Coinswitch, detailed on Twitter:
The TDS of 1% for crypto transactions remains as it is. But there is a clarification. The onus of deducting TDS has been on crypto exchanges or on 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 central bank’s continued crypto ban proposal contribute to the uncertainty that drives crypto companies and investors away from India. Crypto exchange Binance, for example, does not see India as a viable business opportunity.
What do you think about the crypto tax penalties imposed by the Indian government? Let us know in the comments section below.
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Author: Kevin Helms