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High taxes on cryptocurrencies penalizing retail investors curbs their future

EconomyHigh taxes on cryptocurrencies penalizing retail investors curbs their future

GST Council is going to slap the highest 28% tax on cryptocurrencies breaking opportunity for unstructured economy to invest in Crypto.

GST Council in levying 28 percent tax on cryptocurrencies and related services.  This recommendation is likely to be tabled at the next GST Council meeting for a formal go-ahead.  The date for the next GST Council meeting is yet to be decided.

Sources have indicated that the government’s view is to keep cryptos on par with lottery, casinos, betting, and racecourses. Still, there is a lot that is undefined in the arena of cryptos such as GST on crypto mining, sale, and purchase, and exchange value.

Earlier, in the Union Budget for FY2022-23, Finance Minister Nirmala Sitharaman had charged a 30 percent income tax on earnings from virtual digital asset transactions. As per the guidelines, such income will be taxable even if taxpayers’ total income is below the threshold limit of Rs 2.50 lakh. This proposal came into effect on April 1, 2022.

Negative Impact of High Taxation of Cryptocurrencies

Government keeping down other sources to control the Indian economy

Cryptocurrency users perceive that the government sees a threat of cryptocurrencies to directly control the Indian economy and thus, hastily set forth the highest levels of taxes to ensure it does not grow into a looming giant to directly threaten the government.

Making it Casino Money will Drop its Potential

Penalizing cryptocurrencies by branding them at the level of lottery, casinos, betting, and racecourses will devalue the business and stunt its growth while in other nations, these businesses are flourishing and unhindered.  In fact, presently, most Indian Web 3 startups are taking off for Dubai and Singapore.

Due to the government interference in hindering businesses, over 23,000 dollar millionaires have left India since 2014 with the crackdown on black money being the most apparent reason for the exodus.  There were 7,000 leaving in 2017 alone.  Apparently, the business climate in India is not plausible for the multitude of millionaires except for a few.

Killed the Golden Goose Before It Could Lay Eggs

Perhaps cryptocurrencies would raise the supplying-buying-spending and investing-building chain because of the mass inflow of money causing citizens to prosper all around but apparently for the government, prosperity is not the aim but rather government control with government money along with their private-sector team specifically hand-picked by them.

The high GST Tax of 28 Percent Will Eat Into the Indirect Tax Net

The scale of high taxes levied on cryptocurrencies is penalizing entrepreneurs and retail investors even before they have begun and jeopardizing their futures.  They are complaining that from traditional businesses to technology startups, all entrepreneurs are now victims of the #draconian business policies” of the Indian government!

The soaring GST slabs of 28 percent cryptocurrencies will expand the indirect tax net on cryptocurrency-related services.

There is a 30% tax along with a 1% TDS and an intended “plot” to impose 28% where GST is seen as a crackdown to extinguish the successful crypto industry. All Indian cryptocurrency enthusiasts are aggrieved with such draconian taxes.

There is a question about taxation too.  While the government of India has not yet passed the Crypto Bill and Finance Minister Nirmala Sitharaman specifically stated in a Press Conference that taxing it does not make it legal, is the government then taking illegal money by taking it?  At the same time, Ms. Sitharaman said taxing cryptos is a sovereign right.  Something does not add up.

Other netizens state that except for the PM’s friends, nobody can run businesses and most of the gifted entrepreneurs are running abroad due to the tough Draconian laws.  They also state that the government is ensuring that “no one else runs a good business and earn money except GOI and friends connected to them. If citizens earn above 5 lakhs, the tax department arrives at your door to “break your legs and cripple you”. However, the GOI does allow foreigners to come and “rule Indians because per GOI, only they have clean money.”

With reference to taxation, the Indian economy is in shambles because the purchasing power had reduced while the cost of living has gone up enormously and on top of that, taxes are far higher.

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