Crypto community up in arms against 30 per cent tax

Until late Thursday, the hashtag # reducecryptotax was trending on Twitter.

The change.org petition was started by Aditya Singh, Co-founder of CryptooIndia, and then amplified by popular social media influencers like Sandeep Bahuguna, Pushpendra Singh, and Kashif Raza.

By 11.15 PM on Thursday, the petition had 44,600 signatures.

The main questions being asked by the Indian crypto community were: what was the basis for the 30 percent tax number, why wasn’t there a slab system according to activity (investing, mining, or trading) and why was the government raising the barrier to entry for crypto?

Even the top exchanges were supporting the small investors.

“While taxation is a positive step, a 30 percent tax will discourage traders. We believe that crypto-assets should be treated fairly and on par with other asset classes like equities to enable growth of the industry in the long term, ” said Sumit Gupta, CEO of CoinDCX, on Twitter.

The investor community was miffed that the government had equated the crypto industry with gambling.

“I just don’t understand why the government is treating it on par with gambling or the lottery. “India could be a leader in blockchain if we have sound policies,” said Kashif Raza, a popular crypto commentator.

The crypto traders have to pay trading fees to the exchange, blockchain fees on transfers etc., which weren’t factored in by the government, the investors felt.

“Indian crypto 30% flat tax rate is unfair for investors who fall into lower tax brackets, especially those who have turned to digital assets as their sole means of livelihood since the pandemic. It creates an unnecessary barrier to entry for new investors and likens a legitimate, global asset class to betting or gambling, ” said Anoush Bhasin, founder of New Delhi-based cryptocurrency tax advisory Quagmire Consulting.

In an interview on Thursday, FM Nirmala Sitharaman said that the finance ministry is still consulting with the industry.

The Central Board of Direct Taxes chairman, JB Mohapatra, told ET on Thursday that a large number of investors indulging in crypto currency transactions had not been declaring such income and the income tax department has collected enough data on such entities.

“In many of the cases, tax returns were not filed, although they invested and traded. In many cases, the returns were filed, but the crypto surpluses were not declared….In some cases where a surplus was shown, there were major differences in accounting, ” Mohapatra told ET.

Separately, Thailand, which had earlier introduced a 15% cryptocurrency capital gains tax, decided to do away with the levy on Thursday after severe public backlash.