Crypto Taxation Rules on Deductibles Unfortunate For Indian Industry, Says WazirX Founder

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Coinbase’s plan to establish an outpost in India may clash with anti-crypto laws
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India crypto taxation rules in the proposed Finance Bill 2022 will only make things harder and curtail the industry unless they are changed, according to the founder of WazirX crypto exchange Nischal Shetty. He was commenting about a clarification from the country’s finance minister Shri Pankaj that the government would treat transactional loss/profit incurred on each digital asset separately, for purposes of taxation. 

The clarification means that any transactional losses arising from one digital asset cannot be offset using transactional profits for a different cryptocurrency. This means that these losses are not tax-deductible. The minister also said that crypto mining infrastructure costs will be treated as capital expenditure which is not deductibles.

Shetty said that the new directive on how the government would treat crypto transactional loss/profit in taxation regulation is something new that had turned up. He called it an unfortunate way to look at the new crypto technology in the country and said he hoped that the government changed it. In additional comments about the regulation situation, Shetty said the country can scale its crypto sector further with a bit of regulatory support.

“India does not have to do much to gain dominance in crypto. India has a large and talented young population. India has the never say die attitude amongst the buidlers. With a bit of regulatory support, India will zoom in this sector.” 

Yesterday’s clarification from the finance minister has caused a big uproar from industry proponents and leaders especially through the now trending #ReduceCryptoTax hashtag. Many are calling it unfair for the government to tax profits yet not offset losses. The tax regulation comes into effect from next month.

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CoinDCX crypto exchange co-founder and CEO also criticized the proposed crypto regulation for introducing a 30% taxation on cryptos. He said this had the potential to reduce innovation and adoption of new tech in the country at a time when other countries around the globe were now adopting a pro-crypto regulation.

The finance minister was responding to a request for clarification from the Indian National Congress member Shri Karti who needed to know the status of the cryptocurrency regulation in India. Karti had demanded to know how the government would treat taxation of mining equipment acquisition costs and losses/profit relating to the transfer of virtual digital assets.