High Taxes Can Kill the Crypto Industry in India, CZ Cautions
Besides existing taxes, a new draft ITR form suggests that foreign businesses could be taxed if they have got a user base in India.
India’s anti-crypto policy came into sharp focus at the prestigious Singapore Fintech Festival (2-4 November), where Binance CEO flagged high tax rates as undoing the fledgling crypto business in the country.
With over 60,000 participants and 850 speakers representing top global financial services, banks, and policymaking bodies, Singapore Fintech Festival (SFF) is one of the most awaited events in the digital assets and fintech industry.
CZ on Indian Crypto Taxes
Binance CEO Changpeng Zhao (CZ), during a panel discussion at SFF that was live-streamed, said, “India has high tax, which is probably going to kill the industry.” He was referring to new crypto taxes that became effective from April this year, media reports noted.
India introduced a 30% capital gains tax and 1% transaction tax on virtually all transactions in digital assets that came into effect in April 2022. Since then, local crypto exchanges have reported a slump in volume by as much as 90%.
Besides, the government has tightened the regulatory environment, and these platforms need to follow more comprehensive KYC and security norms.
Binance announced in 2019 having acquired the Indian crypto exchange WazirX. But in a recent spat with WazirX CEO Nischal Shetty, CZ revealed that the deal was never completed and Binance was only providing wallet services as tech solutions.
Faced with declining volume, WazirX laid off 40% of employees last month.
More Taxes on the Way
Early this week, India’s Central Board of Direct Taxes (CBDT) put out a revamped common ITR form that it intends to introduce in place of a series of ITR forms. Notably, the draft ITR form has fields that seek information about foreign businesses having their user base there.
Tax experts see this as an attempt to include crypto and Web3 companies that have been incorporated outside India but have their user base here. As per a recent Nasscom report, India has over 450 crypto and Web3 startups, and 60% of them are registered in crypto-friendly jurisdictions with a clear regulatory environment.