Imagine that the tax on crypto is already around 30% and you also have to pay 1% per crypto transaction. In India, this is reality since July 1, but not quite. The first week of July, there was a typo on the website of the Income Tax Department.
High tax on crypto
We are lucky in the Netherlands when it comes to crypto tax. We pay here only a fraction of what investors in India pay. There, it works out as follows:
As of April 1, 30% tax on crypto (and NFTs) will be applied there. This is tax that is deducted from profitable transactions. You can call that ridiculous, because this 30% tax is even higher than the tax on betting, gambling and lotteries. This is ‘only’ taxed at 28%.
Even after a storm of criticism, the country has not decided to reverse this tax. In fact, another 1% was added. It is not levied on profitable transactions, but on all transactions.
Withholding tax
That last 1% tax on all transactions is called Tax Deducted at Source (TDS). So for each trade you make, 1% is paid to the tax, and of all the profits you make from it, another 30% is paid. Yes, really.
The Typo has been now rectified by the government officials and the TDS on 'Payment on Transfer of Virtual Digital Asset – Section 194S' reflects on the official website as 1%. pic.twitter.com/MRDZdSjDbq
— Kashif Raza (@simplykashif) June 8, 2022
This 1% TDS rate was temporarily changed to 0.1%, but this has since been rectified, the Income Tax Department reported on Wednesday. This is only one-tenth of the actual TDS.
Mixed feelings
If you are going to tax crypto so heavily, it is logical that there will be resistance. When India announced these taxes in February, investors were both happy and angry.
A regulated crypto market ensures on the one hand that it will not be banned so easily. But on the other hand, 30% tax on profits is of gigantic proportions. The extra 1% must be added to that.
