Indian Think Tank Proposes Lowering Crypto Tax to 0.01% to Boost Revenue and Transparency

According to CoinDesk, a technology think tank in India has proposed lowering the country's controversial 1% tax deducted at source (TDS) on crypto transactions to 0.01%. The Indian government introduced a 30% tax on crypto profits and the 1% TDS in July 2022, causing a significant drop in traffic and pushing exchanges into survival mode. The New Delhi-based Esya Centre's study suggests that lowering the tax rate could help the government achieve its goals of increasing revenue and improving transparency. The TDS has led to an estimated 5 million crypto traders moving their transactions offshore, costing the government a potential $420 million in revenue since its introduction. The study, titled 'Impact Assessment of Tax Deducted at Source on the Indian Virtual Digital Asset Market', reveals that the tax has failed to achieve one of its main objectives: taxing those who earn profits from crypto. The report's author, Vikash Gautam, stated that the tax has not curbed speculation or created transparency around transactions. The Indian government announced the 30% tax on crypto profits and the 1% TDS in February 2022, with Finance Minister Nirmala Sitharaman stating that the intention behind the TDS was to increase traceability in India's crypto ecosystem. However, the tax has been met with criticism from both domestic and international participants, who warned it could kill the industry. The study also calls for the government to clarify the applicability of TDS to offshore platforms, as it is currently unenforceable according to stakeholders.