By Alicia Maher
India authorities plan not to implement the new crypto policy until a global consensus is reached. However, many top Indian crypto players claim that this move will significantly reduce the industry’s growth.
Varying Reactions To The Suspension
Ashish Singhai (chief executive and founder of CoinSwitch crypto exchange) opined that “crypto traders, like intra-traders in the stock equity, are high-volume traders. They make up for the thin margin profits with huge trade volumes. Hence, nearly all of them will have restricted trade activities when their capital is locked up with huge TDS.”
The CoinSwitch CEO further remarked that traders have over $6.5B worth of investment in the crypto market. Hence, most of them are likely to experience losses due to tax policies such as this one and might never be able to trade again. An awards event earlier in the week regarded CoinSwitch as the firm with the best work-life balance and purpose-driven culture for the outgone year. It is important to note that the exchange is also India’s biggest crypto investment app.
A Government Clarification Is Needed – Indian Crypto Industry Players
The majority of the top players in India’s crypto industry have requested that the government clarify the aspects of the proposed crypto policy that has been suspended. The players’ previous demand from authorities was to create a conducive infrastructure to aid the industry’s growth.
However, the authorities have yet to lay the groundwork in line with the demands from these industry players. A top-level executive with Nishith Desai associates (a tax audit firm) also said, “the implementation of the new tax provisions will cause a significant decline to crypto trade volumes in the country.”
He also said, “everyone will feel the full effect of this move next year, including those who already own digital assets.” Another top player Sumit Gupta (the chief executive of CoinDCX exchange), added, “exchanges would be least concerned with declining trade volumes. The impossibility of offsetting losses with part of the profits made from trades will hinder individual traders with small trading balances and hinder broader adoption of the crypto space.”
A Bloomberg report was the first to disclose that Indian authorities would suspend the implementation of the new crypto policy until there is a global consensus. One of the top government officials who spoke at a virtual meet on April 1, 2022, acknowledged that “the government must develop and implement an ideal crypto framework.” But, he didn’t give further details of how the government intends to achieve this goal.
An Additional Burden
While the crypto firms are still struggling to deal with the new crypto tax policy successfully, they would have to start worrying about indirect taxes, which constitute another burden. Recently, Indian tax regulators accused 12 crypto exchanges of failing to pay their goods and services tax.
After the probe, the tax agency fined the exchanges and now expects them to pay their GST and a fine, which amounts to $13M. However, a tax legal counsel has opined that the GST evasion allegation isn’t a tax evasion issue but happened because the exchanges misinterpreted the crypto tax policy.