India continues to put more regulatory pressure on the local crypto market. This time, authorities have chosen taxes as another means of control. Thus, India’s Ministry of Finance has recently announced a new crypto tax law that implies a 1% deduction at source applicable to all trades with digital assets. This means that from now on, each crypto investment will be taxed separately. Besides, mining costs will no longer count as the cost of acquisition, which cancels the option to apply for compensation. Such a hasty legislative initiative has shocked the local crypto community. Ashish Singhal, co-founder and CEO of India’s largest crypto exchange CoinSwitch Kuber, is sure that this measure is “detrimental to the Indian crypto industry and the millions of people who have invested in this emerging asset class.” The expert is concerned that this regulatory step will cause the emergence of the underground peer-to-peer grey market where users will act anonymously, which would run counter to the purpose of the tax. Notably, in early 2020, the Federal budget bill recognized Virtual Digital Assets (VDAs) as an emerging asset class. Therefore, Ashish Singhal expected the country to gradually ensure that crypto regulations were “on par with other asset classes.” Instead of this, India made a step backwards, he thinks. The entrepreneur believes that if such regressive provisions were applied to the equity market, this would certainly discourage retail investors.
