India Collects Over $12M in Crypto Tax as Adoption Surges
- India collects over $12 million through a one percent Tax Deducted at Source (TDS) on cryptocurrency transactions during this fiscal year
- The government had imposed a 30 percent tax on crypto income, which is not included in the TDS collections
- Despite heavy taxation, India leads in cryptocurrency adoption, ranking first in the Global Crypto Adoption Index, prompting the government to consider a more comprehensive approach to regulation
Crypto Transactions in India Surpass $12 Million in TDS Collections
Cryptocurrency investors in India are on the rise, prompting the Central Board of Direct Taxes (CBDT) to collect more than 100 crore rupees (over $12 million) through a one percent Tax Deducted at Source (TDS) on crypto transactions in this fiscal year. India's government implemented a one percent direct tax on all crypto transactions from July 1, 2022.
The Impact of Crypto Taxation
In her 2022-23 budget speech, India's Finance Minister Nirmala Sitharaman announced the introduction of a one percent TDS on crypto transactions. She cited unprecedented growth in crypto transactions due to this specific tax system. She also proposed a 30 percent tax on income from the transfer of any virtual digital asset. However, the central government has since shifted its stance.
The head of the tax body revealed that they have gathered over 700 crore rupees (approximately $84 million) through TDS on online gaming companies and crypto transactions, surpassing the $12 million mark. It's important to note that this TDS collection does not include the 30 percent tax on income from crypto transfers imposed by the government.
The Road to Regulation
While cryptocurrency regulations in India remain unclear, the central government has taken significant steps to regulate crypto adoption in the world's most populous country. The government has explored options ranging from imposing a complete ban on crypto to promoting a global crypto framework. The initiation of the TDS tax was aimed at curbing cryptocurrency investments, but it hasn't been entirely successful, as crypto adoption in the country has continued to grow.
India Leading in Crypto Adoption
Despite heavy taxes, India's cryptocurrency adoption is rapidly increasing. In fact, India currently holds the top position in the Global Crypto Adoption Index published by Chainalysis. The Global Crypto Adoption Index evaluates cryptocurrency adoption based on various metrics across more than 150 countries, and India has emerged as the leader. As a result, the Indian government is now considering a more nuanced approach to regulating the crypto framework in the country.
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