India’s Finance Bill, which includes proposed rules on taxing crypto, is set to be introduced in parliament tomorrow.
India’s Finance Bill, the legislation that includes proposed rules on crypto taxation, is scheduled to be passed in parliament Thursday evening.
Any easing of the government’s stance will be contained in amendments to the bill, which will be introduced to the lower house and followed by voting on each of the amendments, according to people familiar with parliamentary proceedings.
The bill was sent to the upper house for consideration. As a money bill, the role of the upper house is minimal. Suggestions of the upper house may or may not be considered by the lower house.
Discussions have already taken place with members of the lower house. The bill is expected to be passed by the lower house by the end of the day.
“Unless major changes are made to the first proposed finance bill, the passage of the bill is merely a formality,” said Shehnaz Ahmed of the policy think tank Vidhi Legal.
Crypto taxation proposals include a 30% capital gains tax, a 1% tax deducted at source (TDS), no offsetting of losses and taxation of gifts.
“I don’t expect the government to make any changes to the proposals on 30% capital gains tax, the 1% TDS or on other aspects of the tax proposals that needed clarity such as the offsetting of losses,” said Subhash Garg, former secretary in the Finance Ministry’s Department of Economic Affairs, who helmed the government’s first report to propose actions concerning cryptocurrencies.
When initially announced, the government’s proposals spurred excitement and confusion over whether the country was approving crypto as an asset by taxing it. The government has since clarified that cryptocurrencies remain unregulated in India. Just because they are taxed does not mean they are legal.
Since the announcement, efforts to reduce the taxes in the form of a change.org petition, an online campaign like #reducecryptotax, and meetings between industry and government have taken place.
Reports have indicated the government has also been working on classifying crypto under the indirect tax law of GST (Goods and Services). The government may want to increase the current 18% tax on services provided by crypto exchanges to 28%, in line with gambling and horse racing. It is unclear whether this will feature in the Finance Bill.
Still, as CoinDesk has reported, the industry has little hope the government will change its crypto-taxation stance, and is, therefore, discussing a Supreme Court challenge to stave off the impending tax legislation.