Although the 30% tax on crypto-assets came into effect on April 1, 1% TDS will also be deducted from crypto-assets from July.
As part of the Finance Bill 2022, a 30% capital gains tax is imposed on crypto transactions. In addition, a loss incurred on the transfer of the virtual asset will no longer be able to be compensated by any income calculated under the “other” provision of the Information Technology Act, because the word “other” has been removed.
Simply put, a loss of Bitcoin assets cannot be compensated by earnings from Ethereum or any other virtual digital asset.
On Friday, Bitcoin is close to $42,450. Over the past 24 hours, the crypto has fallen over 2%. Overall, the majority of cryptocurrencies saw selling pressure. On the other hand, Tether, USD Coin, Binance USD, TerraUSD and Dai made marginal gains, while a Monero crypto is still up over 5%.
According to data from CoinMarketCap, the global crypto market capitalization is $1.96 trillion, down 2.05% over the past day. The total volume of the crypto market in the last 24 hours is $69.34 billion, which represents a decline of 15.15%. Bitcoin dominance is currently at 41.06%, down 0.07% on the day.
Meanwhile, over the past seven days, data from CoinMarketCap shows market leader Bitcoin has plunged more than 8%. While Ethereum, the second largest crypto after Bitcoin in terms of market capitalization, fell by more than 7%. Other cryptocurrencies like BNB plunge nearly 5%, XRP slips over 9%, Solana dipped above 20.50%, Cardano lost over 11.5%, Terra fell nearly down 18%, Avalanche contracted nearly 17%, Polkadot fell 15%, Shiba Inu fell over 9%, and Polygon fell over 14%, among others. Generally speaking, the crypto markets have been on a bearish tone these days.
But in those seven days, not all cryptocurrencies faced a selling bias, few held steady ground and even gained momentum, albeit at a slower pace. Tether was flat, Dogecoin jumped nearly 2%, Near Protocol jumped nearly 8%, Monero surged more than 7%, and Convex Finance zoomed nearly 3% among a few others.
The start of April drove investors more towards profit booking as buying sentiments in the crypto markets saw more profit booking.
Many factors have driven the price movement of cryptocurrencies this week.
From tighter monetary policy, strict fiscal rules, soaring commodity prices to the biggest elephants in the room, geopolitical tensions and concerns about global inflationary pressures, all have played a role in the evolution of feelings towards virtual currency trading.
Now, for example, consider the last seven-day performance of cryptocurrencies. With the new tax rules in India, traders cannot offset losses incurred in Bitcoin, Ethereum or XRP against gains that have been recorded in Near Protocol and Monero.
Additionally, from July, traders will also pay 1% TDS on crypto assets, which will further add to the woes.
So what is the impact of the country’s new tax rules on traders?
Nischal Shetty, co-founder of WazirX, said: “The proposed 30% tax, whether or not the crypto-assets are fixed assets, will be detrimental to the investor growth the industry has seen so far. decision will surface -traders unable to save on taxes even though they are not currently in income tax brackets.Plus not allowing investors to offset losses from a trading pair of crypto with the earnings of another type will further discourage crypto participation and curb the growth of the industry.
“We strongly believe in the need to regulate and tax crypto, but it is about to do more harm than good in its current form. It will also not deliver the desired results for the government. may lead to cascading participation on Indian exchanges that adhere to KYC standards and lead to increased outflow of capital to foreign exchanges or those that are not KYC compliant.This is not conducive for the government or the ecosystem crypto from India,” Nischal added.
On tax rules, Probir Roy Chowdhury, Partner, J Sagar Associates (JSA), says, “The Finance Bill seeks to impose a 30% flat tax on cryptocurrency gains. 5% tax liability for businesses in cryptocurrency trading would more significantly affect small “retail investors” who may be in lower tax brackets or rely on lower capital gains tax rates.The Finance Bill also imposes a 1% TDS on payments to Indian residents for cryptocurrency transactions.This TDS will lead to lower liquidity, as TDS would be taxed regardless of profit or loss. ier.”
Regulatory restrictions are seen as a hindrance to the crypto markets.
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