Crypto Tax | Government must reconsider its current regressive stand
The genesis and use of cryptocurrency has been a controversial topic for both Indian investors and the government. If initially the government’s stance towards virtual digital assets (VDAs) was ambiguous, later it became clear through its policies that the government was not in favour of these assets which have the potential to earn immense profits.
With the government deciding to tax VDAs, many believed that it was a sign of the State legitimising cryptocurrencies; however, soon it was clear that heavy taxes does not mean approval, and the State was just exercising its ‘sovereign right’. It is clear that the government is not in favour of investing in this highly-volatile asset, and has taken steps to discourage investors turning to this asset class.
Yet another setback for cryptocurrency investors and traders came on March 21, when, in a reply to a question raised in Parliament, the Minister of State for Finance Pankaj Chaudhary said that the losses incurred in one VDA could not be set off against the gains made in another VDA while computing tax. Currently such a provision is available for those investing and trading in equality assets, but this stand on VDAs will further discourage cryptocurrency investors. Chaudhary also said that infrastructure costs for VDA mining will not be treated as cost of acquisition but as capital expenditure which cannot be claimed as a deduction. These moves will throttle the industry's growth.
Across the world there are many countries like Singapore, Germany, Switzerland, etc. that have adopted investor-friendly policies towards VDAs, while India is among the few that has adopted such antagonistic laws.
What is disheartening is that India possesses immense potential to effectively become a
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