The government is willing to address the real concerns and reservations of crypto trading participants arising from the new tax regime for virtual digital assets, but firmly believes that there is no economic justification for lowering the proposed 30% tax on profits from crypto assets’ trades.
While a review of the 1% TDS (Tax at Source) rate on all virtual asset transactions may be considered, senior Treasury officials also noted that even investments in stock exchange stocks and debt instruments that create value for the economy , involving the collection of securities transaction taxes.
Responding to industry concerns about the tax rate, Inland Revenue Commissioner Tarun Bajaj strongly supports a 30 per cent rate, saying there is no reason to tax these assets less than anyone else pays on their income.
“The super rich pay 42 percent in taxes, including surcharges,” Bajaj told The Hindu. “It’s not that some economic value is created or that the country’s GDP is growing (from cryptocurrency trading). If you’re speculating and you don’t think it’s viable, stop doing it,” he said, adding that the government doesn’t need to encourage Such a deal, even though it might revisit the 1% TDS rate.
“We’re working on the little details,” Mr Bajay said, noting that the tax authorities are aware that gathering information on transactions will be a challenge and that the TDS tax will have to be levied.
“That’s why we also say that offsets are not allowed, otherwise someone could make a capital gain on equity and show a loss in your personal wallet-to-wallet transaction,” he noted. “The TDS will be cut, and if the exchange is not done, the regulations will apply to them. So now the responsibility and obligation falls on them.”
“If there are any reservations that we agree with that the legislation needs to be straightened out, then of course, we will address that,” said J.B. Mohapatra, chairman of the Central Committee on Direct Taxation. “But the fact remains that the digital virtual asset tax was introduced to help the larger ecosystem also not be affected by the so-called opacity of that part,” he stressed.
“You shouldn’t get any information about the regulatory regime from this tax. Until the regulatory regime is in place, from a tax standpoint, we’re not concerned about whether you can do derivatives or day trades on this front,” the tax commissioner said.
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