India passed a draconian crypto tax law on Friday. Nischal Shetty, CEO and founder of WazirX, one of India’s largest crypto exchanges, said in an interview, “We’ve entered a period of pain. It’s almost like not letting the industry work. The effect is the same, now all foreign technology will dominate in India, and we don’t want that to happen in the crypto space.”
Shetty’s biggest objection to the new tax law is the withholding tax (TDS), which is levied whenever an Indian buys or sells cryptocurrencies. “A 1% TDS will kill liquidity, which means ultimately everyone’s profitability will be lower. It’s a lose-lose,” he said. A move that doesn’t allow different cryptocurrencies to offset gains and losses is even a 30% levy on crypto profits The capital gains tax is even worse.
He noted that in some cases, Indian investors could lose more money than they invested due to the way the new tax works. Shetty revealed that discussions with the government are still ongoing and an industry meeting with the government is awaited.
As previously reported, India’s parliament on Friday passed a controversial tax proposal, a week after India will begin levying a 30 percent capital gains tax on cryptocurrency transactions. In addition to capital gains tax, Indians must pay a 1% withholding tax (TDS) at source when transacting with cryptocurrencies, as well as non-offset profit and loss and gift taxes. The Indian crypto tax law will come into effect on April 1.
