According to Cointelegraph, a legal practitioner believes that the Indian government’s “draconian” crypto tax is intended to crack down on blockchain and crypto technologies, as they believe that these technologies are only used for money laundering and terrorist financing.
At the 2024 Symposium on Peer-to-Peer Financial Systems, Amit Kumar Gupta, a legal practitioner at the Supreme Court of India and the Indian Institute of Technology-Kanpur, presented a research paper on crypto taxation in India.
Gupta explained that the crypto and blockchain space in India is heavily taxed but lacks regulation. In an interview with Cointelegraph, he said that this stems from the lack of understanding of the actual use and potential of Web3 technology by Indian regulators.
India's crypto law requires citizens to pay a 30% tax, which comes into effect on April 1, 2022. Gupta noted that the tax applies to profits and users cannot offset losses. In addition, every crypto transaction is also subject to tax.
Gupta believes that this tax system is intended to discourage people from using cryptocurrencies. He explained that the government’s position is “we will not use or allow anyone to use cryptocurrencies because this technology is only used for money laundering and terrorist financing.”
Gupta also believes that India’s tax system will force Indian crypto entrepreneurs to relocate to regions with clear regulation.
Despite regulatory uncertainty in India, tech startups continue to develop Web3 projects in the country. Rohit Mohan, CEO of NC Global Media, an Indian Web3 marketing company, said that despite India's cautious attitude towards cryptocurrencies, its developers are still driving innovation. He believes that education and collaboration are crucial.