India has entered a period of pain, says WazirX CEO
The Indian parliament has passed a rule to see citizens pay 30% tax on cryptocurrency transactions.
Indians will start paying a capital gains tax of 30% on crypto transactions. The new rule comes into effect exactly one week after Parliament passed a controversial tax proposal earlier today.
Furthermore, Indians buying or selling crypto will have to pay a 1% tax deducted at source (TDS). Indians will also have to pay taxes on crypto gifts, with no ability to take deductions for losses.
The cryptocurrency taxation will come into effect on April 1, while the TDS will launch on July 1. The adoption of cryptocurrency taxation has caused an uproar in the Indian crypto community.
Nischal Shetty, the CEO and founder of WazirX, one of India's biggest exchanges, commented that the taxation would harm the growth of the Indian crypto market. He said;
"We have entered a period of pain. This is almost like not letting the industry function, and what will happen is what happened to the drone industry, where eventually the largest drone industry is in China. Now all the foreign tech is going to dominate in India, and we don't want that happening in crypto."
He added that the move is terrible, especially for the younger people in India’s cryptocurrency space. Shetty added that;
"What we care most about is our customers. Millions earn a living through crypto. During the [coronavirus] pandemic, they lost jobs, and crypto was one of the reasons people survived. We are concerned about the loss to their livelihood, their dreams … these are people in the 18 to 30-year-old category."
The WazirX CEO pointed out that the 1% tax on TDS will kill the liquidity in the Indian crypto space, ultimately leading to a decline in profitability for everyone. He added that;
"This will push people to other channels – peer to peer, one-to-one trading. As an industry, we had worked so hard to make sure everyone comes through the right way, millions through KYCs [know your customer protocols]. Now the other fear is that this will go back to the gray market or non-KYC approach."
Shetty lamented that the move to not allow crypto losses to offset gains is even worse than the 30% capital gains tax on crypto profits itself. He added that in some cases, Indians would lose more money than they have made due to this rule.