India has collected more than $19.2 million in tax revenue from cryptocurrency transactions under the new tax laws that went into effect on April 1, 2022. The legislation subjected income from crypto transfers to a flat tax rate of 30% and imposed a 1% TDS on cryptocurrency transactions. The Union Finance Ministry disclosed that tax collected at source on payments made upon the transfer of virtual digital assets totaled $19.2 million for the fiscal year up to March 20, 2023.
India’s Minister of Information Technology, Rajeev Chandrasekhar, emphasized that the Indian government is encouraging of any innovation in the sector, including web3 and blockchain. However, the government’s response to the sector is based on harm, legality, and illegality, ensuring ease of doing business and living while safeguarding security and intelligence objectives.
Chandrasekhar stated, “We have no problems on anything to do with blockchain. But certainly, it is RBI’s case that crypto represents a macroeconomic risk.” India’s central bank has often highlighted potential financial stability risks that crypto could pose while recommending an umbrella ban on the asset class.
The IT minister also clarified that there is no issue with cryptocurrency trades in India if all rules are followed. He made it clear that buying cryptocurrency through reputable means wouldn’t be against the law. However, he added that governments are being careful due to the ongoing market uncertainty, saying, “Just because it sounds like an innovative, fashionable thing to do, we should not be rushing headlong into saying crypto is right and crypto is good.”
India’s approach towards cryptocurrency has been mixed. In 2018, the Reserve Bank of India had banned banks from dealing with cryptocurrency exchanges, leading to legal challenges. However, the country’s Supreme Court overturned the ban in 2020, allowing cryptocurrency trading to resume. In recent years, India has also been exploring the possibility of introducing its own digital currency, the digital rupee, to compete with the rising popularity of cryptocurrencies.
The latest tax revenue collection figures highlight India’s ongoing efforts to regulate the cryptocurrency sector while ensuring that it does not pose a threat to the country’s financial stability. The government’s approach to the sector will likely continue to evolve as the market and technology surrounding cryptocurrency continue to develop.