A legal practitioner has argued that the Indian government’s “draconian” crypto tax is an attempt to displace blockchain and crypto technology because they believe it’s only being used for illicit purposes like money laundering and terrorist financing.
At the Peer-to-Peer Financial Systems Workshop 2024, 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 India’s crypto and blockchain space is heavily taxed but unregulated. In an interview with Cointelegraph, the legal practitioner said that this stems from a lack of understanding of Indian regulators about the real uses and potential of Web3 technologies.
Amit Kumar Gupta presented a research paper on India’s crypto taxation in Dubai. Source: Cointelegraph
India’s crypto law, which requires citizens to pay a 30% tax, came into effect on April 1, 2022. According to Gupta, the tax applies to profits, and users cannot offset their losses. He also highlighted that there’s also a tax on each crypto transaction made by users.
Not understanding blockchain technology
Gupta described the taxation regime as “draconian” and believes it stems from government officials’ lack of understanding of the technology.
Gupta told Cointelegraph that the reason behind the tax is to discourage people from using crypto. He explained:
“Their stand is that we are not going to use or allow anyone to use cryptocurrency because this technology is only for money laundering and terror funding. These kinds of activities.”
The lawyer highlighted that the Indian government sees crypto as “worse than gambling.”
Gupta also believes India’s tax regime will push Indian crypto entrepreneurs out of the country and into jurisdictions with clear regulations.
“They have not cleared anything. They have put stringent conditions. Any founder, trader or anyone dealing with cryptocurrency or blockchain in any sense, whenever he makes a profit, he leaves the country,” Gupta added.
India has the potential to set a strong example
Despite the regulatory uncertainty in India, tech startups continue to work on Web3 projects within the country. Rohit Mohan, the CEO of India-based Web3 marketing firm NC Global Media, told Cointelegraph that while India is cautious about cryptocurrencies, its developers continue to drive innovation. He explained:
“Major players are entering the market. While widespread crypto adoption may take time, India can potentially set a strong example globally.”
Mohan also added that education would be crucial. The executive believes that collaboration and user education is of utmost importance.
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