Do People Move Cryptos to Foreign Crypto Exchanges In India?
What would you do if you have to pay a high crypto tax? When the government imposes cryptocurrency tax, people usually end up paying tax. No one wants to get in trouble later. At the same, charging a high crypto tax discourages people to invest in crypto.
After taking a high risk and doing all the work, if you make a profit, you have to pay a bigger portion as a tax. According to the Esya Centre report, Indians moved more than $3.8 billion in trading volume from local to international crypto exchanges after imposing the crypto tax in February 2022.
Nirmala Sitharaman, the Indian Finance Minister, made an announcement of a 30% tax on any income from cryptocurrency. A 30% tax is huge, it is normal that people react to this. If there is a way to minimize the tax, people will do that.
If you sell your crypto and make a profit, you have to pay crypto tax. People may hold crypto for the long term. Crypto-related businesses will find it difficult to run their business. They will move their business outside of the country so that they do not have to pay a high tax.
The local cryptocurrency exchanges will be affected the most due to the tax policy since people don't like to use local exchanges to trade cryptocurrencies. We may see similar things in any country when the government makes its move to charge a high cryptocurrency tax.
Recently Italy did the same thing by imposing a 26% tax on cryptocurrency capital gain in the 2023 budget. They see a big opportunity to increase revenue by imposing a high crypto tax. But if people move their cryptocurrencies outside or even go to live in a foreign country where the crypto tax is zero or low, the government cannot do anything except destroy their dream of getting huge revenue from crypto assets.
The government banned cryptocurrency to stop people from getting involved in crypto. But it did not work. We have examples of banning Bitcoin over and over. It is funny if they become successful in banning Bitcoin, why do they need to ban the same thing again and again?
The next thing they do is to implement a high tax on cryptocurrency capital gain. Maybe people will not get involved in crypto looking at the tax policy or even if people get involved and invest in cryptocurrency, the government will get revenue from the tax.
Not only that, they are working on Central Bank Digital Currency (CBDC) to get things under control in the name of economic development and the inclusion of mass people into the financial system. Let's see what happens next.
So what do you think? Please feel free to leave your comments. Thank you for reading this post. That's it for now. I'll be back with another post.
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Indeed, the governments don't dislike the citizens using cryptocurrencies, but they want to earn more tax from the cryptocurrency income and trade.