India has collected more than $19.2 million in taxes since the implementation of a new regulation imposing a flat rate of 30% on cryptocurrency transfers.
According to the Ministry of Finance, the government collected 15.79 billion Indian rupees (approximately $19.2 million) in direct taxes from virtual digital asset payments in the fiscal year ending March 20, 2023.
The lower house of India’s parliament, India’s top legislative body, passed the cryptocurrency tax bill on March 25, 2022, mainly targeting cryptocurrency exchanges.
Exchanges operating in India or offering cryptocurrency trading to Indian investors are required by law to pay a 30% capital gains tax effective April 1, 2022.
During the 2022-2023 federal budget, Finance Minister Nirmala Sitharaman has proposed a 1% tax on cryptocurrency transactions, which means that starting July 2022, Indian citizens will be required to pay 1% on every transaction that buys or trades cryptocurrencies tax. The move to tax cryptocurrencies is an attempt to boost government revenue and curb illicit transactions.
The new tax policy has been welcomed by Indian authorities, who have been grappling with challenges posed by cryptocurrencies, which have been used for illicit purposes such as money laundering and terrorism financing. While some investors expressed concern about the tax, others saw it as a necessary step to legitimize the Indian cryptocurrency market.
The Indian government has been tightening regulations on cryptocurrencies in recent years, and the new tax policy is part of it. The government has been particularly concerned about the risks posed by cryptocurrencies, including their potential use to finance terrorism and other illegal activities.
However, despite the risks, governments have recognized the potential benefits of cryptocurrencies, such as their potential to increase financial inclusion and improve access to capital for SMEs.