With the increasing popularity of cryptocurrencies, some countries have imposed taxes on digital assets. In particular, India's lack of clear tax rules has resulted in significant tax revenue losses.
Missed Tax Opportunities
According to a recent report by Esya Centre, India has lost over $1 billion in potential taxes from the cryptocurrency sector due to unclear tax regulations. Since July 2022, the country has missed the chance to collect approximately 6,000 Crores of Indian rupees as traders migrated to foreign exchanges with clearer regulations.
Strict Stance on Cryptocurrencies
India is among the nations charging substantial taxes on cryptocurrencies. However, the unclear regulatory stance has led enthusiasts towards offshore platforms. In 2022, a 30% tax on unrealized profits and a 1% tax deducted at source were introduced. Experts suggest such measures might restrict crypto use in the future. While the Deputy Governor of the Reserve Bank of India expressed skepticism about cryptocurrencies, others see more risks than benefits.
International Perspective
Since its tough stance in 2018, India continues to tighten crypto regulations. For instance, in December 2023, show-cause warnings were issued to nine offshore exchanges. India's strategic position raises global concerns, potentially impacting both the local and global crypto markets. Meanwhile, international watchers note the promising potential of India's market.
India's industrial policy on cryptocurrencies remains a topic of discussion. Despite the measures taken, a significant number of citizens prefer offshore exchanges and cryptocurrencies over the national digital asset — e-rupee. Many experts believe the country's negative stance on digital assets could have serious implications for both the local and global markets.
