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SIMPLY PUT: There are messages hidden in the crypto tax

Feb 10, 2022, 00:07 IST
Now, we all know that any profit made from trading in cryptocurrencies will be taxable at 30%. But that’s just the beginning. There’s a lot more that India’s Finance Minister didn’t say, than what she said.
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The way the government is treating crypto traders in the same way it treats gamblers or lottery enthusiasts. We can’t stop you, so we’ll tax you so much that it might break your spirit.

BI India

Crypto critics would say that it is the right thing to do because whether it’s Bitcoin, Ethereum or Solana, they can’t be used as currency. Those who buy any coin or non-fungible token (NFT) are just hoping that someone else will buy it at a higher price. If that’s not a gamble, then what is.

If the argument is that cryptos are inevitable in the digital era, the government is anyway looking to get the digital rupee out in the market this year. So, for them, there isn't a lot of love or trust left to lose.

What is Digital Rupee?
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That's evident in the 1% tax to be deducted at source (TDS). Every time someone buys crypto they have to deduct a 1% tax on the value of the sale. The question is, why is the government asking for TDS?

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It basically wants to track crypto transactions itself, instead of relying on data provided by the exchanges. And, therefore, find out who are the people buying and selling cryptos, how much are they buying/selling, and maybe even, what else they do, financially speaking.

These are important signs for you to keep in mind before putting more money into these ‘virtual digital assets’ before the crypto bill makes it through the Parliament. Policymakers don’t like crypto — if you didn’t know by now, you should.

So, expect very little empathy, and an even lesser amount of mercy if the taxman comes calling. For now, the good news is that the new 30% tax kicks in only from April 1. Until then, you may still have to pay the tax on capital gains ⁠— long-term or short-term ⁠— or business income as the case may be.

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Tightening the noose around crypto can achieve one more thing ⁠— move more money into the stock market.

Here’s how.








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