Crypto Tax Compliance in India ‘Very Low’, Clearances Imperative to Gain Government’s Trust: Taxnodes CEO

Apr16,2024



Many crypto investors in India have failed to pay 30 percent tax on profits made through crypto activities over the past two years, possibly due to regulatory ambiguity and lack of customer awareness, crypto tax firm TaxNodes has warned, community. You are urged to pay your crypto taxes on time. In a conversation with Gadgets360, the Singapore-headquartered firm pointed out that crypto tax compliance in India remains 'very low' since these taxes were first imposed in 2022.

TaxNodes CEO Avinash Shekhar says there is a misconception that the government lacks ways to trace crypto transactions – leading opportunists to believe they can evade taxes.

Shekhar has urged Indian crypto traders and investors to ensure that they are complying with tax laws when compiling their filings this year. Agreeing with many market players on this sentiment, Taxnodes CEO said that it would be good for the Web3 industry if the Indian community gains the trust of the government with discipline and compliance.

“To promote mainstream adoption of crypto assets as a viable investment option, it is imperative for startups, consumers and government bodies to collaborate synergistically and adhere to government guidelines. This collaborative effort could force the government to implement effective, yet soft, rules, Shekhar said.

In 2022, the Finance Ministry of India brought the digital assets sector under its tax regime. Under current laws, all crypto income in India is taxed at 30 percent. To keep track of these largely anonymous crypto transactions, the Indian government also levies one percent TDS on every crypto transaction.

Despite several requests from Web3 firms for revision and reduction in these tax percentages, the Finance Ministry has not yet announced any change in the policy.

Only 0.07 percent of crypto holders in India will pay their crypto taxes between 2022 and 2023, a report by Sweden-based tech research firm Divly claimed last year. Shekhar also said that the primary reason for low tax compliance in India is lack of awareness among taxpayers.

By April 2023, the government reportedly received more than $19 million (about Rs 157 crore) from the controversial one percent TDS on every crypto transaction.

In February this year, CBDT Chairperson Nitin Gupta had revealed that around Rs. Rs 180 crore collected through TDS levied on crypto transactions during financial year 2023-24.

Assessing the situation, Shekhar said that the main reason for low tax compliance in India is lack of awareness among taxpayers.


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