Indian Government Refuses To Lower Crypto Tax Despite Pressure From The Digital Asset Industry

JAKARTA - India's decision to maintain existing crypto tax rates has sparked debate among digital asset industry players. Although the request for a reduction in tariffs has been submitted, Finance Minister Nirmala Sitharaman confirmed that crypto tax regulations will remain in effect during the 2024/25 fiscal year.

In April 2022, India implemented a 1% source-cut tax rate (TDS) for crypto transactions. This rule led to a decrease in trading volume in India's crypto industry. Industry leaders have advocated for a reduction in TDS rates to 0.01% and progressive tax recognition of profits.

However, the latest budget presentation confirms that there are no changes to the TDS 1% tariff or a 30% fixed income tax on crypto income. In addition, the long-term capital profit tax increased from 10% to 12.5%, and the short-term capital profit tax rose from 15% to 20%.

Indian Finance Minister's Strict Attitude

Sitharaman, India's Minister of Finance, is expected to maintain current tax rates. The government has warned about the risks of crypto trading, and the Central Bank of India (RBI) has historically opposed cryptocurrencies. Although RBI banned financial institutions from serving the crypto industry in 2018, the Supreme Court overturned the decision in 2020.

The RBI Bulletin May 2024 highlighted the speculative nature of crypto assets and criticized decentralized finance (DeFi) for being driven by speculation rather than real economic transactions.

Even so, India's crypto industry remains optimistic about tax reductions in the future. International developments, such as the legalization of crypto in some countries, could affect policies in India.