The government has tightened norms for crypto by not allowing losses incurred in certain digital assets to be deducted from income from other versions of crypto holdings, the junior finance minister said on Monday.
The government will not allow tax relief on infrastructure costs incurred during crypto asset mining as it will not be considered an acquisition cost, Minister of State for Finance Pankaj Chaudhary told lawmakers in parliament.
The explanation by the minister was a return to the industry being subject to high tax rates in the budget announced last month. The RBI and the government are skeptical about the sector despite an increase in trading volume over fears the digital currency could be used for money laundering, terrorist financing and price fluctuations.
“Treating the profits and losses of each market pair separately will hinder crypto participation and stunt industry growth. It is unfortunate, and we urge the government to reconsider this,” said Nishcal Shetty, co -founder and chief executive officer of Binance’s WazirX.
The crypto asset tax regime in India will be rolled out gradually in the financial year starting April 1. The 30% tax provision will take effect at the beginning of the fiscal year while the one related to the 1% TDS will take effect from July 1, 2022.