According to a recent report by the Esya Centre, India is at risk of losing over $2 billion in tax revenue from cryptocurrency transactions over the next five years. The report reveals that the government has already missed out on collecting $724 million in tax revenue from digital assets since July 2022 as traders have migrated to offshore exchanges to avoid compliance burdens and high tax rates. The government imposed a 30% capital gains tax on cryptocurrency transactions and a 1% Tax Deducted at Source on domestic crypto trades. However, these measures have been largely ineffective as traders continue to bypass restrictions using VPNs, and offshore platforms still dominate trading volumes. The report recommends revising the Income Tax Act to make offshore platforms responsible for Tax Deducted at Source deductions, even if they're not physically based in India, and lowering the Tax Deducted at Source rate to 0.01% to address the challenges. Industry stakeholders have called for a lower Tax Deducted at Source rate and the ability to offset losses to revitalize domestic trading.



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