Hello friends,
I am doing good, and I hope that you are having a good time with your near and dear ones.
Tax is the liability that we are supposed to pay to the government based on our income. I'm not aware of other countries and how they follow their taxation because I have never been part of any such discussion. Also, I have never visited any other country and this is why I don't know how things work in different countries. You can say I have limited knowledge about it and I'm fine to accept this but I am aware of the tax system in India. This tax is about the income tax and I know how it works and what are the slabs available for different earning individuals.
In India, we follow a slab system for different tax rates, and in crypto, this is not followed. The government has no answer as to why they built a new type of system for crypto. This has been generated from the gambling business and they put it as it is in crypto. We can say that India is considering crypto as a gambling asset and this is why they have applied the same tax rules for cryptocurrency traders and exchanges.
The current tax rate is very high which is 30%. It means if you are earning any money in the financial year then be ready to pay thirty percent of the income. Yes, you need to pay 30% of the income which is a big amount and there is another flaw. Even if you find yourself ok with the bigger tax rate then also please don't forget that you need to pay taxes on all the earning transactions but you will not be able to set off the loss. This is not a good part of the rule because some people I know have not made any money but they had to pay tax because they lost money and this loss was not adjusted.
1% TDS is also applicable on the sale transactions. This is not a tax but it affects every user who is frequently or intranet trader. I'm not a trader and I rarely trade and that too I do it in Indian exchange. I do not have any tax liability because my earning is not that much but if I earn through crypto then I will have to pay.
Because of this rule, the Indian crypto exchanges have been affected badly. Many traders started trading in the international exchanges which is not good as per the Indian tax experts. Many users also stopped trading because they know that crypto is a volatile asset and they will have to pay taxes even if they do not make money because of the no offsetting. It's sad that because of these rules, the crypto industry in India is not growing and exchanges are struggling in this bear market situation. The government needs to review this and experts are expecting that if this part is revised by the government and some tax is lowered, it can help the industry grow.
Thank you
Have a nice weekend
