The Indian government has collected over 100 crore INR (around $12 million) so far this fiscal year from a 1% Tax Deducted at Source (TDS) levied on cryptocurrency transactions.
Implemented on July 1, 2022, the TDS requires a 1% direct tax payment on all crypto transactions in India. Overall, India’s Central Board of Direct Taxes (CBDT) has garnered over $84 million in TDS from online gaming and crypto taxes.
The $12 million from just crypto taxes does not include income tax charged on actual crypto transfers, which is set higher at 30% in India.
These taxes are part of India’s strategy to curb unchecked crypto growth after Finance Minister Nirmala Sitharaman cited a “phenomenal increase” in crypto activity recently.
However, India still lacks a clear framework for regulating cryptocurrencies. After initially seeking a total crypto ban, India now promotes formulating a global crypto oversight model.
In fact, India ranked #1 globally for grassroots crypto adoption in the 2022 Chinalaysis Crypto Index. The stiff taxes have not deterred Indians from investing in crypto.
One Indian exchange executive argued the 1% TDS purpose failed, as crypto adoption still surged exponentially across India despite the taxes introduced to disincentivize it.
For now, the Indian government is focused on extracting tax revenue from the thriving crypto transactions happening nationwide. But comprehensive legislation is still needed to clarify India’s policy stance.
