IndiaTech Seeks to Clarify Crypto Tax Rules in Budget 2022, Writes to FM
IndiaTech, the country’s tech industry association, urged Finance Minister Smt. Nirmala Sitharaman to clarify the various taxes imposed on crypto assets. The body forwarded a letter to Sitharaman on the matter.
In the letter, IndiaTech called on the government to revise the existing tax rules to accommodate crypto assets, as well as to define the process for taxation and disclosure. It comes at a time when finance ministry officials have met with representatives from various industries ahead of the upcoming Union budget 2022. Additionally, the much-delayed Cryptocurrency Bill 2021, which was due to be tabled in the winter session of parliament, but has now been postponed to mid-2022.
Ramesh Kailasam, President and CEO of IndiaTech said: “The budget should ideally propose consistent rules on direct taxation and the GST Council should detail the applicability of taxation, otherwise there will be confusion.” IndiaTech is a consortium of major cryptocurrency exchanges, some of which were recently questioned for allegedly evading the Goods and Services Tax (GST). CoinSwitch Kuber, CoinDCX, and WazirX are among the members of this industry body.
The forum also recommended that the Minister of Finance recognize cryptocurrencies as digital assets rather than currencies. Currently, there is little certainty on how cryptocurrencies would be taxed in India, due to uncertainty as to whether they should be classified as currencies, securities, or some other form of asset. Income tax on the returns of various investments ranges from 10 percent to 35 percent. GST rates could also be adjusted depending on the classification of cryptocurrencies.
There are three types of crypto trading: INR transactions, crypto to crypto trading, foreign currency transactions. There has been a big gap in the way the GST is calculated on cryptocurrency by exchanges and tax agencies. Some business strategies adopted by cryptocurrency trading platforms are under increased regulatory scrutiny.
Platforms like Unocoin and CoinSwitch Kuber, for example, operate as brokers or aggregators, buying and selling cryptos to users and charging commissions on transactions. IndiaTech proposed that a flat-rate 18% GST be imposed only on the platform commissions of exchanges (brokerage or foreign exchange fees per trade), rather than the full amount, as is the case with trades. of electronic commerce.
According to the letter, for direct taxation, the sector body recommended enabling laws to recognize and classify it as capital gains or business and professional income, depending on the type of business of the holder and the length of time. as well as the form of outfit.
In May of last year, IndiaTech presented a white paper with the Ministry of Finance, suggesting a five-point roadmap for increasing transparency in crypto-assets and trading.