May 26, 2022

India’s proposed tax law on virtual digital assets will not allow individuals to offset the loss of one asset by acquiring another, the Treasury Department said on Monday in a move that the head of the country’s leading cryptocurrency exchange called “damaging.” called “regressive”. I

In February of this year, India proposed legislation to levy a tax on virtual currency. He proposed a 30% tax on income from the transfer of virtual assets. For details on all such cryptocurrency transactions, New Delhi has offered a 1% withholding tax deduction on payments related to the purchase of virtual assets.

In a clarification released on Monday, the Treasury Department announced today that it intends to independently tax any investment in digital assets, separate from regulating the country’s stock market operations.

The clarification, which also states that cryptocurrency mining infrastructure costs cannot be treated as acquisition costs, came less than two weeks before the proposed cryptocurrency tax law goes into effect (April 1).

The crypto community in India was shocked by this announcement and many founders expressed their disappointment.

Ashish Singhal, co-founder and CEO of Andreessen Horowitz-backed CoinSwitch Kuber, said Monday’s actions “are hurting India’s crypto industry and the millions of people investing in this emerging asset class.”

Singhal warned that such a move could lead users into an underground peer-to-peer market where users are not required to verify their real identity, defeating the purpose of the tax.

Earlier this year, the federal budget recognized “virtual digital assets (VDA) as a new asset class. Therefore, the natural course of action would be to gradually align regulation with other asset classes,” he said.

“Instead, today, with this clarification, we took a step back. If such a regressive provision were applied to equities, it would discourage private investors from participating,” he said.

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