India’s use of cryptocurrencies to pay for daily retail purchases has been slower than in other countries like the US. Notable is the fact that many Indian business owners have started to experiment with crypto payments. This contributes significantly to the volume of transactions recorded on the country’s blockchain networks. Chartered accountants in India (CAs), must dive deeper into blockchain records before crypto activities can explode to their full potential.
Punit Agarwal (founder and CEO of KoinX), a platform for automated crypto taxation, highlighted the ‘needs-of-the hour’.
Agarwal said in an interview with Gadgets 360, “Due to the taxation this year on cryptotrades,”
“The provisioning and policymaking around the industry requires CAs to assess the economic interpretation of Blockchain records. This involves keeping records of all crypto transactions and understanding the regulations. It also includes valuing cryptocurrency as inventory or capital property.
When the Indian finance ministry included cryptocurrency transactions under a tax system earlier this year, it justified the decision by stating that the deed would provide an element of traceability to crypto transactions that are otherwise anonymous.
All profits from crypto transactions in India are taxed at 30% since April. A 1 percent tax deducted (TDS), for crypto transactions, has also been available in India since July.
Companies that experiment with crypto transactions, such as the famous teaseller from Bengaluru have complained about not being able to see any profit after tax deductions.
The average daily transaction volume of Indian exchanges WazirX and CoinDCX was $5.6 million. This is roughly Rs. 44 crore) in August. This volume was approximately $10 million, or roughly Rs. 80 crore).
Taxes on crypto contributed Rs. Pankaj Chaudhary (Minister of State for Finance) recently disclosed that India’s economy benefited by 60.46 crore between July and December.
To discuss concerns and to voice concern about India’s crypto-related decisions and policies, India’s Web3 watchbody, the Bharat Web3 Association, met with top officials from India’s finance ministry.
Representatives from BWA pointed out that India’s taxation of crypto gains was a hindrance to the sector’s overall growth.
Agarwal commented on the situation and predicted that India might consider a decrease in crypto taxes, which currently stand at 30 percent.
“It is important to not reconsider the taxation decision. What is more important is how the industry progresses, especially as it becomes more regulated. The industry expert said that the government might relax the 30% tax and 1 % TDS as the industry grows more mainstream.
Thailand resorted in February to lowering its 15% tax on financial gains derived from the mining and trading of digital assets. This was after a significant backlash.
While crypto companies like Coinbase, Polygon, among others, have repeatedly expressed their dismay at the inability to set up a crypto business here. Rumours about Indian exchange WazirX shifting its head office from Dubai made headlines in April.
“The 1 percent TDS has already poured over $7 million (roughly Rs. Since June, 58 lakh have been taken out of crypto markets. “This could also make it difficult for some crypto businesses to leave the country due to the low liquidity in the markets,” said the KoinX chief.
A large portion of India’s crypto-related decisions are still awaited.
India is currently working to create laws for the digital asset sector. However, India has not yet provided any clarity on digital assets.
Agarwal stated that the Income Tax Department of India considers Bitcoin and all other cryptocurrencies tools for investment, not standalone currencies.
India’s G20 Presidency aims to collaborate with other countries to develop policies that will streamline crypto sector work on an international scale.
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