India: Tech startup association writes to Finance Minister seeking crypto tax clarity

As India is bracing for the Union Budget 2022-23, an industry association called IndiaTech has written to Finance Minister Nirmala Sitharaman.

The association that represents internet start-ups, including crypto exchanges, is asking the government to include crypto taxation rules in the budget, local reports claim.

The development comes as major cryptocurrency service providers are under the regulatory radar in India. While tax authorities are probing possible tax evasion, Zanmai Labs’ WazirX has reportedly paid 492 million rupees as tax and penalty. All this is being done on the backdrop of a crypto bill deferral from the Parliamentary session that concluded in December last year.

Rameesh Kailasam, president and chief executive of IndiaTech, told Outlook Money,

“While the bill on crypto maybe still in progress, the budget should address the tax and related issues quickly to ensure that there is clarity before the financial year ends and for the upcoming years as well. Ideally, notifications from Finance Ministry around taxation and GST council will help clear the confusion for both crypto exchanges as well as investors.”

With that being said, in line with the government’s previous announcement, the industry body wants cryptocurrencies to be recognized as digital assets under the legal framework.

Meanwhile, with unclear taxation rules, IndiaTech has reportedly suggested that the government levy a flat 18% indirect tax or GST [Good & Services Tax] on the commission charged by the exchanges. This will essentially include brokerage or exchange fees per trade, but not the entire amount.

On the direct taxation front, the association is seeking that crypto gains be treated as income from capital gains or gains from business and profession, as per the type of business, the report noted.

Here, it must be added that the country’s crypto players are in want of a regulatory framework as new launches and investor interest is at their peak. Recently, CryptoWire launched India’s first crypto index – IC15, to feature the top 15 most traded cryptocurrencies by market cap.

Meanwhile, India has also become home for the Metaverse launches.

Also Read: ‘No intention to evade tax,’ India crypto exchange WazirX responds to ongoing investigation