Despite a growing global trend towards embracing blockchain technology and cryptocurrencies, India has continued to resist this movement with its 2023 budget maintaining the high crypto tax regime that was implemented in 2022. Indian Finance Minister Nirmala Sitharaman presented the new budget, which included changes to income tax rate slabs but made no mention of cryptocurrencies, central bank digital currency (CBDC), or blockchain technology.
Currently, the country imposes a 30% tax on all crypto profits and a 1% tax deducted at source (TDS) on all crypto transactions. The new budget also adds stipulations that could result in fines or jail time for non-compliance with the TDS provision. The fine would be equal to the tax liability of the transaction while offenders also risk three to 84 months in jail for failure to comply.
Regulators introduced TDS on all crypto transactions to determine the number of Indian citizens using cryptocurrencies. The government will have its first opportunity to review this data when Indians file their income tax returns starting in May.
Former Finance Secretary of India, Subhash Chandra Garg, called for more clarity on crypto taxes but warned that “we might not see any new changes in the upcoming budget 2023.” Prime Minister Narendra Modi’s party, which has taken a hardline approach to regulating cryptos, controls both houses of the legislative body and is expected to adopt the new provision into law, effective April 1.
Despite the hope for a reprieve from the high crypto tax regime, the Indian crypto community will have to wait at least one more year for any potential changes.
