On April 1, the Indian Finance Bill 2022 will come into effect, featuring new rules governing cryptocurrency taxation. Now, all cryptocurrency will be taxed at a rate of 30%, under new regulations approved by India's upper house of parliament.
First introduced in January, the Finance Bill modified existing tax rules and levied a fresh 30% tax on all digital asset holdings. Additionally, crypto traders will not enjoy any benefits of reporting their losses in crypto trading, as the government will not factor in losses when designing the tax bill. Although the inability to offset losses against profits discourages some crypto investors, the amended tax rules have largely been greeted positively in India's burgeoning crypto community. This is because earlier last year, suspicions were stoked that the government was considering an all-out ban on cryptocurrency.
India is home to up to 20 million cryptocurrency investors and its crypto market sits at around $5.37 billion, or 400 billion rupees, according to Reuters.
Still, some paying attention to India's crypto scene have their own suggestions for beating the large tax bill: "My suggestion to sell off everything applies to those who are in overall profit," Tweeted Naimish Sanghvi, the founder of the crypto news site Coin Crunch India. That way you can still offset your losses with profits before March 31. If you’re only in profit, or only in loss across all your investments, then it’s wise to just hold!
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“Treating profits and losses of each market pair separately will discourage crypto participation and throttle the industry’s growth. It’s very unfortunate, and we urge the government to reconsider this," Nischal Shetty, the founder of one of India's largest crypto exchanges WazirX, told Cointelegraph earlier this year.