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The Indian government has introduced new crypto tax penalties, including non-payment of crypto tax deducted at source (TDS). Much to the dismay of the crypto community, Finance Minister Nirmala Sitharaman did not mention crypto in her budget speech this year. Crypto income remains taxable at 30% while TDS remains at 1%.

There is no hidden tax benefit in India

India’s Finance Minister Nirmala Sitharaman presented the Union Budget 2023 in Parliament on Wednesday, a day after she presented this year’s Economic Survey, which highlighted the need for a “joint approach to regulating the crypto ecosystem.”

To the disappointment of the Indian crypto community, Sitharaman did not mention crypto during his budget speech. After his speech, many Indian crypto advocates took to Twitter to voice their opinions. Neeraj Khandelwal, co-founder of crypto exchange Coindcx, tweeted:

There are no changes to crypto taxation in India in the budget session. It is 1% TDS and 30% on profit. This puts India at a web3 disadvantage for another year.

Satvik Vishwanath, CEO of Indian crypto exchange Unocoin, wrote: It has been a year since 1% TDS was announced and we all thought it would impact the industry. It worked. Now we need revitalizing changes.”

Rajagopal Menon, vice president of crypto exchange Wazirx, expressed his opinion. “Indian Union 2023 the budget did not make any changes to the existing crypto taxes, leaving Indian crypto companies to the steps of heaven. There is constant uncertainty due to high taxes and lack of a strong regulatory framework, which are stifling progress in the sector.”

Indian government imposes crypto tax penalties

While the finance minister did not mention crypto in his budget speech, the Finance Bill reportedly includes an amendment to the Income Tax Act that deals with crypto TDS.

Crypto tax company Koinx explained On Twitter, the penalty for non-reduction or non-payment of crypto TDS will include an amount equal to the unpaid TDS to be determined by the joint commissioner, noting that 15% interest per annum will be imposed on late payments. According to India Today, failure to pay TDS on crypto transactions can lead to up to seven years in jail.

Ashish Singhal, co-founder and CEO of crypto trading platform Coinswitch, elaborated on Twitter.

1% TDS for crypto transactions remains the same. But there is a clarification. The onus of deducting TDS was on the crypto exchanges or the user (if using P2P or other means) but till now there was no penalty for cancellation.

When Sitharaman announced crypto-income taxation at 30% and TDS at 1% for crypto transactions, crypto trading volumes in India plummeted. The lack of a regulatory framework for crypto and the Central Bank’s ongoing crypto ban proposal are contributing to the uncertainty that is driving crypto companies and investors away from India. Crypto exchange Binance, for example, does not see India as a viable business opportunity.

What do you think about the crypto tax penalties imposed by the Indian government? Let us know in the comments section below.

Kevin Helms

Kevin, an Austrian economics student, discovered Bitcoin in 2011 and has been an evangelist ever since. His interests are bitcoin security, open source systems, network effects, and the intersection of economics and cryptography.

Image Credits: Shutterstock, Pixabay, Wiki Commons

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