A complicated, new crypto tax policy has recently been introduced in India. These new tax policies regarding virtual digital assets will prevent traders from offsetting their losses from trading one digital asset against the profits made with another.
The new policy will likely incentivize traders to pick one virtual asset like Bitcoin to trade with, rather than using trading pairs. For example, if a trader were to invest $200 into a BTC/ETH trading pair, and profited 15% in BTC but lost 15% in ETH, they would be required to pay 30% gains on their Bitcoin profits while not being able to account for any of their Ethereum losses.
The government is receiving a lot of backlash from Indian companies within the crypto industry. WazirX, one of India’s largest crypto exchanges had its founder, Nischal Shetty spoke out against the policy calling it “regressive” and “unbelievable” and urged the government to reconsider the policy.
Others have suggested traders might want to sell what they have before March 31st, 2022, which is when the policy will take place to have a fresh start under the new laws.
Similarities between the crypto bill and gambling laws have been brought to focus as many have realized that the government is approaching crypto the same way as it approaches the country’s gambling and lottery tax laws.
Comparably high crypto tax policies have been considered in countries like Thailand and South Korea, but all have ultimately failed to pass. These countries eventually came to the conclusion that such stifling laws would hinder the growth of the emerging market. South Korea got rid of its 20% crypto tax, and Thailand exempted traders of paying 7% value-added taxes.
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