Tax sops top crypto, gaming company budget demands; the government is urged to make local data storage mandatory
Top tax cuts cryptothe budgetary requirements of gaming companies: online gambling industry urged the government not to reduce the current withholding tax (TDS) threshold of Rs 10,000, which is said to be under review by the Ministry of Finance.
According to Economic Times, the crypto industry has meanwhile asked the government to reduce the TDS by 1% on crypto transactions and revise tax provisions to allow investors to offset any loss incurred in the transfer of the virtual asset with the income.
State of online game: The government has started the process of regulating online gambling companies through proposed rules made by the Ministry of Electronics and Information Technology.
Budget demands: Online gaming companies have requested clarification on the skill-based gaming tax structure recommending that the value of supply to the industry continues to be gross gaming revenue, which is fees charged by a company to facilitate player participation. .
The Minister of Finance also announced that the loss of one crypto asset cannot be compensated by profits made on other crypto assets. The government also announced that it will levy 1% withholding tax deduction (TDS) on crypto from July 1, 2022. In December 2022, the government disclosed that it had collected a total of Rs 60.46 crore of the VDA transaction since July 1.
Many investors have opted to trade their assets on international exchanges that do not have a 1% TDS deduction scheme, thereby preserving their principal. The government had not anticipated the high share of these transactions. This has created an uneven atmosphere for compliant local exchanges that cooperate with regulators, said Vikram Subburaj, CEO of Giottos Crypto Platform.
Tarusha Mittal, Co-Founder and COO, UniFarm and Dapps, says, “The government should frame strict regulations for the sector in light of the FTX crisis. [which wiped out billions of dollars in global investor money] especially for centralized bodies dealing with cryptography.
The industry is also hoping that the government will allow crypto investors to offset and carry forward their losses to create a level playing field for virtual digital assets (VDAs) in India. Crypto bosses further expect the TDS exemption limit to be raised “to a reasonable level.”
According to a report by Esya Centre, a New Delhi-based technology policy think tank, and Taxsutra, a B2B tax portal, the current tax architecture of VDAs could result in a loss of around $1.2 billion. (INR 99.3 Lakh Cr) from local resources. trading volume over the next four years compared to a pro-market scenario where (a) the TDS on VDAs is at the same level as that on securities (b) tax policy allows the provision to compensate for losses (c ) the taxation of VDA earnings is internationally competitive.
“The government’s idea was very simple. They wanted to know how many crypto transactions were happening because they felt a lot of people weren’t showing it in their feedback. That’s why they imposed this 1% TDS on the seller. While most Indian exchanges have implemented this since the rule came into effect on July 1, foreign exchanges have not as they are outside of Indian jurisdiction…we must remember that the crypto is truly global,” explained Rajgopal Menon, VP of WazirX.