The crypto community of India has not been very supportive of the tax rules that the government enforced on the trade of virtual digital assets last year. It is estimated that only 0.07 percent of Indian crypto owners actually declared and paid their taxes in the year of 2022. The finding has been published by Divly, a Sweden-based tech research firm, that also claimed that on a global level just 0.53 percent owners declared their crypto holdings to their local authorities last year.
The report has compiled the percentages of crypto tax payers across 24 nations. With 4.09 percent, Finland clocked the maximum crypto tax payment rate. Philippines, on the other hand, ranked the lowest with the percentage of crypto tax payers at merely 0.03 percent.
India settled at the third last spot on this index with just 0.07 percent crypto holders who paid their taxes.
“We adopted a multi-step approach to estimate the tax payment rate for cryptocurrencies in various countries. The methodology involved using official government figures, search volume data, and available cryptocurrency ownership data. Our research used a combination of official government figures and search volume data to estimate the number of cryptocurrency investors who declared their activity to their local tax authorities,” Divly said in its report.
Indians, last June, began to see one percent tax deductions on each crypto transaction. This essentially means that one percent TDS is being levied on every step around the purchase, trade, and deposit of crypto assets. In addition, Indian crypto holders also have to pay a 30 percent tax on all crypto profits.
The two rules have time and again been criticised by the Indian crypto community for hindering the growth of the sector with financial pressure.
It is estimated that India’s crypto circle could swell to over 156 million users by the end of 2023. If this is the case and if Divly’s report is to be believed, it is rather alarming that only around 100,000 crypto holders declared their holdings and paid the due tax amount in India last year.
Yet, the tax payments around crypto did manage to collect millions for the government treasury in India.
In the last nine months, the TDS collected from crypto tax amounted to over $19 million (roughly Rs. 157 crore). The detail was disclosed to the Parliament recently by Pankaj Chaudhary, who is the Minister of State for Finance in the country.
In India, KoinX provides crypto taxation services to get community members to adhere to the tax rules.
Launched in 2022, the company claims to be already working with crypto firms like CoinDCX, BitBNS, CoinSwitch, WazirX, Binance, and KuCoin among others, to manage their taxes in India. Individual investors can also use the platform to calculate their crypto taxes.
Apart from India, several other nations have also levied taxes on crypto trading and profits. The aim is to maintain some track of crypto transactions, that are otherwise largely untraceable.