- CBDT requested a 20% additional tax on money generated through DeFi.
- 28% tax rate was proposed by the Goods and Service Tax Council (GST) of India.
Two days from June 28 to 29, a panel of India’s top economic decision-makers will debate whether to levy an additional 28% tax on crypto transactions. In addition to the existing bitcoin income tax of 30%, the proposed tax will be imposed. Many believe that the two-day meeting will not allow the panel to reach any decisions on rates. They will, however, debate a 28 percent tax rate at the very top.
The 30% cryptocurrency income tax was implemented in February of 2022. Indian finance minister Nirmala Sitharaman says the tax bill is a positive step towards cryptocurrency regulation.
Rising Trouble For the Indian Crypto Sector
After the tax rate was raised, trading volume in cryptocurrencies dropped by 30% for a few months. Many popular exchanges in the country, are now considering altogether quitting the country because of the high tax rate. Officials in India felt that the country’s 30% income tax rate was insufficient. Since cryptocurrency gaming is akin to gambling, India’s former finance minister said more significant taxes were needed to discourage people from indulging in the activity. Taxes should be increased by 40 percent or 50 percent, he said.
Centralized trading platforms were taxed at 30 percent on their profits. In an effort to avoid excessive taxes, many Indians rushed to DeFi projects, which are free from crypto income tax. In May 2022, India’s Central Board of Direct Taxes (CBDT) requested a 20% additional tax on money generated through DeFi.
There was a 28 percent tax rate initially proposed by the Goods and Service Tax Council (GST) of India, which the council will review next week. The GST has created a legal committee to determine the appropriate tax rate for cryptocurrency transactions within these activities.
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