The Indian government has amassed Rs 157.9 crore ($19.2 million) in taxes from cryptocurrency trading and direct transfers in the financial year between 2022 and March 20, 2023.
India Raises $19M From Crypto Taxes
According to a CNBC report, India's Finance Ministry disclosed the figure to Ram Nath Thakur, Janata Dal party representative in the Rajya Sabha, in a written statement about the taxes received by the government. The ministry revealed that the Union Budget 2022-23, which deducted a 30% tax from Virtual Digital Assets (VDA) trades and a 1% tax deductible at source (TDS) from transfers, generated $19.2 million between the 2022-23 financial year. Recall that the government introduced the taxation regime last February and implemented it between April and July. While crypto remains unregulated in India, the country believes that the tax policies would give investors clarity and direct the regulation of the industry. On the other hand, the Reserve Bank of India (RBI) has suggested that cryptocurrencies be prohibited, as such assets are borderless and need international collaboration to avoid regulatory arbitrage.
An Unfavorable Crypto Taxation Regime
While India generated taxes from local crypto traders, the domestic industry has recorded massive losses since the implementation of the tax policy. Crypto Saving Expert reported earlier this year that the tax structure caused Indian crypto exchanges to lose billions in their trading volumes collectively. By October, their trading volumes had plunged to $137.6 million from $4.73 billion at the beginning of the year. Trading activities on local exchanges plunged as investors moved their assets to foreign trading platforms. Between July and September, downloads for local exchange applications also dropped by 16%, while that of offshore exchanges increased at the same rate. Indian technology think tank Esya Centre predicted that at the ongoing rate, the tax structure could lead to roughly $1.2 trillion in losses for local exchange trade volume by 2026. Meanwhile, local exchanges hope the government will introduce some crypto tax relief policies in the upcoming Union Budget for 2023–2024 to urge investors to keep trading in the country.