In Brief:
- IndiaTech wrote a letter to FM Nirmala Sitharaman, requesting clarity on crypto tax rules in the Union Budget.
- IndiaTech has requested the FM to acknowledge crypto as digital assets.
- IndiaTech suggests levying a flat 18 percent GST on exchanges’ platform commissions rather than the total amount.
IndiaTech, an industry association representing consumer internet startups, wrote a letter to Finance Minister Nirmala Sitharaman, requesting clarity on crypto tax rules in Union Budget 2022-23.
According to reports, IndiaTech has urged the government to revise existing tax legislation to incorporate crypto assets, as well as clarity on the method of taxation and disclosure requirements.
Industry professionals claim that crypto platforms have failed to pay the correct amount of GST, owing to a lack of clarity about the tax rates that apply to various business models.
IndiaTech is a union of the world’s largest cryptocurrency exchanges. CoinSwitch Kuber, WazirX, and CoinDCX are among the members of this industry association.
IndiaTech has requested the finance minister to acknowledge cryptocurrencies as digital assets rather than as currencies.
IndiaTech recommends levying a flat 18 percent GST on exchanges’ platform commissions rather than the total amount, as is the case with e-commerce transactions.
In terms of direct taxation, the industry association has advocated enabling rules to recognize and treat it as income from capital gains or gains from business and profession, depending on the holder’s business and the duration and form of holding.
Individuals holding crypto-assets should be required to disclose their holdings at the end of the financial year, according to one of the suggestions in the letter.
IndiaTech has proposed mandatory Know Your Customer (KYC) regulations, Indian ownership requirements for cryptocurrency exchanges, and granting authorized dealers license to exchanges importing crypto.
The letter comes in the wake of the much-delayed Cryptocurrency Bill 2021, which was supposed to be introduced at the parliament’s recently finished winter session.
There is presently no clarity on how cryptocurrencies are taxed in India, owing to disagreement over whether they should be classified as currencies, securities, or another form of asset. At the start of this year, crypto exchange WazirX was caught for Rs. 49.5 crores tax evasion as reported by the Ministry of Finance. The GST Mumbai East Commissionerate recovered a total of Rs 49.2 crores from the WazirX on the scene, as further inquiries are underway.
