A tax proposal on crypto from India’s Finance Minister Nirmala Sitharaman may be closer to becoming law as the country’s lower house of parliament is scheduled to consider the legislation on Thursday.
According to a Wednesday publication, Sitharaman will be introducing appropriation and finance bills for 2022 to the Lok Sabha — the lower house of parliament — on Thursday. The Finance Bill includes an amendment to the country’s income tax laws identifying “virtual digital assets” — including cryptocurrencies and nonfungible tokens — as taxable investments.
First announced by the finance minister in February, the amendment to India’s existing laws proposed a 30% tax targeting digital asset transactions. Sitharaman added at the time that losses incurred from crypto trading would most likely be ineligible for offsetting taxes from any profits. In addition, no deductions would be allowed while calculating income “except the cost of acquisition.”
Under this tax calculation, traders would likely have to pay 30% taxes on gains from cryptocurrencies including Bitcoin (BTC) and Ether (ETH), but not account for losses should the price of the coins fall. Cointelegraph reported that many experts criticized the proposal, which will likely go into effect April 1 following discussion on Thursday.
If you made loss in Bitcoin, you cannot set it off with profit in Ethereum. The new taxation law was clarified in parliament today.
My suggestion is to sell everything you have before March 31, 2022. And start fresh from April 2022.
Cost of mining cannot be deducted too! pic.twitter.com/pfSGPAOFBO
— Naimish Sanghvi (@ThatNaimish) March 21, 2022
The Finance Bill 2022 will be discussed & passed soon.
— Aditya Singh (@CryptooAdy) March 23, 2022
The tax policy on crypto is seemingly a legislative substitute for a previously proposed bill that would have banned “private cryptocurrencies” in India. According to the Lok Sabha’s most recently published list of business, India’s parliament is not scheduled to hear a discussion on the crypto bill during its budget session, which ends April 8.
With a population of roughly 1.4 billion, India has not established a concrete regulatory framework for digital assets following the country’s supreme court decision in 2020 to lift a ban from the Reserve Bank of India on banks’ dealing with crypto firms. The tax proposal under consideration seems to be the closest crypto markets have been to gaining some sort of legal status in India.