India Loses ₹6,000 Crore in Crypto Tax Revenue: A Call for Smarter Policies

Detailed Points

1. Context:

India's stringent crypto tax policy, including a 1% TDS on all transactions and a 30% tax on profits, has resulted in significant tax revenue losses.

2. Impact:

Traders moved ₹2,63,000 crore to foreign exchanges.

Offshore crypto activity surged by 77%, while domestic exchanges saw only a 21% increase.

3. Recommendations:

Reduce TDS: Lower the TDS from 1% to 0.01% to encourage more transactions within India.

Tax Reform: Simplify and adjust the tax rates to align with global standards to prevent capital flight.

Regulatory Simplification: Make it easier for foreign exchanges to operate within India, potentially reversing the outflow of traders.

4. Potential Revenue:

Implementing these changes could increase India's tax revenue from the crypto sector by an estimated ₹9,169 crore to ₹18,338 crore annually.