The crypto space in India is getting more and more diluted thanks to the stance taken by the government. Hey guys! I know that I don't often post, but this was something that has been bothering me for a while now and I had to get it off my chest. So, this post is going to be a bit of a rant from my end.
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Cryptocurrency and its usage in India was always some kind of taboo and most would not even talk about it. In fact, the whole idea of money and investing is something that is not openly discussed in my country.
After the mess created by the RBI banning crypto back in 2018, things seemed like it was going nowhere for the Indian crypto space. This was until this rule was overturned in 2020. This opened flood gates and the crypto space in India thrived for a couple of years.
However, it was still a grey area for our government and they had hardly understood the technology and did not have any idea about what they were dealing with.
Normally when someone needs help with something, we usually call our friends who are good at it or reach out to an expert in this space at least. The Indian government seems to have done neither. Instead of consulting with the leaders of the Indian crypto exchanges, they decided to allow their ego to take do all the talking and passed out laws that basically treated crypto-like gambling.
According to the new regulations, all crypto profits would be taxed at a 30% flat rate. Well, this doesn't seem that bad right? I know many people who fall under the 30% tax slab already and are paying this much. With the high gain potential of crypto, sharing a 30% tax is not that big of a deal.
Now, comes the crappy addition that these old folks did. One cannot offset the loss of one crypto with the profits of another. This means that all your losses are going to be realized for sure and your profits are going to be taxed at 30%.
The thing they did not account for? Crypto to crypto transactions. Many of us who use ETH or BTC for a while now kind of treat 1 ETH as 1 ETH and not $1200. Now, with the profit/loss being calculated for every single transaction that you make, this mindset of ours no longer holds true.
Introduce TDS into the mix and make it a bigger mess. So, 5 days ago, our government introduced TDS on all crypto transactions. This means that every trade you make is taxed at 1% at the source. This can be refunded at the time of tax filing when you declare your taxes for crypto trades.
Now, while this law was introduced from July 1st, there was absolutely no consideration put into accessing what to do with the portfolio of users who held crypto before this. Additionally, trading on leveraged markets like futures is going to screw you over even more with this new law.
All in all this is a big mess that the government created for itself. While the whole idea was to increase its own revenue by adding tax to crypto transactions, the government ended up losing a lot of revenue with many crypto firms moving out of the country. Additionally, several talented people from this space are also setting caps outside India to avoid such crappy laws that make everyone's life harder.
While the rest of the world embraces crypto and moves forward, India is taking a step backward and also making sure that the leaders have enough resources to set shop outside the nation.
People who fall under the lower and middle-class income are affected by this immensely. This is because they had higher exposure to crypto cause of the opportunity that it gave them. The rich however ended up or are going to end up making a ton of money cause of this. How? The rich have enough resources to simply get a Visa or permanent residency outside India. They will continue to pile up on valuable crypto while we get taxed heavily by our crappy laws.
