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Indian Government Clarifies – Crypto Tax Cut To 0.1% Was a ‘Typo’ -Breaking

by Mike Robinson

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Indian Government Clarifies – Crypto Tax Cut To 0.1% Was a ‘Typo’

One small change can have a huge impact on the entire system. Following media reports that India reduced its tax deducted at source by 1% on Virtual Digital Assets, the Government responded to the claims that it would not change the tax. It appears that the Income Tax Department committed a typo on their website. On Wednesday, they corrected their mistake.

“Some media reports have come to the notice of CBDT (Central Board of Direct Taxes), claiming that the rate of TDS on Virtual Digital Assets (VDA) has been reduced to 0.1%. It is hereby clarified that there is no change in the rate of TDS on VDA, which continues to be 1%,” stated the government office on Twitter (NYSE:).

India has a savage crypto taxation policy

The taxes and complicated Indian Government’s approach to cryptocurrencies have strongly affected the second biggest world crypto market. Since April 1, when the new taxation policy kicked in, the trading volumes at India’s major cryptocurrency exchanges slumped to their lowest in years.

The Crebaco report shows that U.S. Dollar trading volume fell by 72% for WazirX and 59% for ZebPay in April. CoinDCX dropped 52%, CoinDCX decreased 52%, 41% on BitBns, and 59% for ZebPay. All crypto-related income is subject to a flat 30% tax for cryptocurrency traders. Every cryptocurrency transaction over Rs. 1, will see a flat tax of 1% deducted at the source. It will be applicable to transactions exceeding Rs 10,000, which is approximately US$129

TDS of 1% on all transactions will drain liquidity out of the market and cause a drop in trade volumes. The most likely impact on smaller exchanges that depend on volume of transactions will be after July 1. Some may even have to close.

The crypto community was in turmoil and it can lead to crypto exodus, experts say. WazirX founder Nischal Shiliya stated on Twitter:

“Countries that do not acknowledge tech innovation will experience massive brain drain. We’re living in a world where location is irrelevant. Talent will go where it is welcomed!”

The Reserve Bank of India has been persistently against cryptocurrencies like , saying “there is no underlying value for such instruments which are essentially speculative in nature.” RBI is working to introduce a digital version of the fiat rupee for better currency management, reducing settlement risk in the system.

As India and crypto community anticipates consultation paper on cryptocurrencies prepared by the Government, Reserve Bank Deputy Governor T Rabi Sankar said to Economic Times, that the soon-to-be-introduced central bank digital currencies (CBDCs) can “kill” whatever little case that exists for private virtual currencies like Bitcoin.

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