No matter how much we earn tax will follow us
Recently there was an announcement from the Indian government about banning international cryptocurrency exchanges. Though I did not see the official news yet I did see some articles online that talked about this. This news created a small panic among many people who are using Binance for their trading and other activities. About a year back there was an announcement that there is a 30% tax on the crypto earnings and there is a 1% TDS on all the transactions. This created a big impact and many Indian exchanges had to lose their support from the international exchanges.
Starting from this news, all the Indian exchanges are now providing all the KYC data to the government and most likely the government will know who is trading in crypto and how much they are earning in crypto. This is just the first step. I believe when they tighten the visibility, they might start including the tax amount automatically if the Indian exchanges provide enough data to them. It is also believed that after this news came almost 95 percent of people have shifted to foreign exchanges and that can be one of the reasons why the government is now after the foreign exchanges. They are currently requesting data from foreign exchanges and if they refuse to give data but still accept KYC from Indians, then there will be a ban and most likely exchanges like Binance may not be accessible for Indians. It is good to take the funds out of the exchange if possible.
The government is doing all these things just for the sake of bringing regulations in the crypto transactions that are happening. Most likely all the crypto transactions should happen under the visibility of the government so that they will have some control over it. They also see this as a convenient facility to get some additional income. No matter what we do, taxes will always follow us.
The biggest problem for crypto investors is the clarity on this particular thing. If we are earning some income from crypto and if we pay 30% tax on that, then are we good or should we do something more? This is the biggest question for everyone. Some people are also looking for loopholes to find out if they can mitigate this tax completely. There is also a possibility where people might find a way to evade this tax completely and that is why they prefer using a foreign exchange. I'm wondering how the government could do something if these transactions are P2P. There is no clarity yet on that.
For people in India, the problem is not just with Taxes. It is mostly the lack of clarity on what needs to be done even if someone genuinely wants to pay taxes and still use crypto. Some people say that it is enough if we pay 30% tax on the crypto earnings and 1% TDS on the transactions, but a few say that on top of the 30% tax, we might as well have to pay the GST. This information is not clear. But as the title says, no matter how much we earn, tax will always follow us. The point is not about evading taxes but about finding the right way to pay the taxes.
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