10% tax might have been better than 30% tax for crypto in India
We have a 30% tax on crypto transactions in India. I have written a few articles in the past on this topic. Today I was wondering if it would have been better if they had kept the tax at 10% flat instead of 30%. The Finance Minister said that this tax is not to encourage people from using cryptocurrencies but to get the data of who and all are dealing with crypto and find a solution for the same in the future. The finance minister also confirmed that we would have a Central Bank cryptocurrency before the end of this year.
The future is going to be crypto and we have no doubt about that. Maybe it is best to adapt to that instead of showing strong opposition. If the government can bring regulations and encourage people to use it for transactions and pay proper tax, it will be good revenue for the country and the transactions across cross borders can also be made easy and simple. Not just India but many countries should come up with such regulations instead of going against them. I understand that the regulations are not very easy to implement. It can be hard to bring everything under the visibility. But when tried it can gradually happen.
Many people would agree if I say that there are still ways to do crypto transactions without the visibility of the government and without paying the taxes. It is similar to how cash is being dealt with in India. People do cash transactions without the government's visibility. Some people really want to not pay taxes and that's why they are doing such transactions. The same can happen with Crypto as well. There are still ways in which the transactions can happen from wallet to wallet which cannot be traced by any individuals. That's one of the biggest advantages this technology brings us. But at the same time, it also brings disadvantages because we cannot predict the illegal or wrong transactions happening between parties.
When digitalization improves and when people start dealing with everything with digital currencies instead of cash, the government can get some sort of visibility. But it is a slow process and it can take several more years. Even though demonetization was a very good step towards it, it is not going to be sufficient and we have to patiently wait for the unorganized sectors to adapt to this model. Not everyone would be willing to pay taxes. The government should also take initiatives to reduce the tax burden on people and instead look for alternative sources of income for the government.
Many people would like to build their business on top of Cryptocurrencies and blockchain technology. The current 30% tax kills that idea and many people have hesitation. People also move to other countries that are crypto-friendly to execute their ideas. If the government can make it a 10% tax, I'm sure many individuals would be willing to pay that 10% tax and we would start seeing the blockchain industry booming in India. Many job opportunities will be created and it will not be a burden on the companies and individuals to pay a 10% tax on their cryptocurrency-related transactions. People wouldn't even want to mitigate taxes and find alternatives.
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