India’s new crypto rules are making life hard for hodlers


Whether you are a current cryptocurrency hodler or a potential investor in India, the government wants you to think twice before investing your money in the sector.

For crypto enthusiasts in the country, it has been difficult to get excited about the space due to speculation about bans and restrictions in recent years.

In February, the county finance minister, Nirmala Sitharaman, gave hope to the the introduction of a tax regime and industry recognition. While it did not grant any legitimacy to the cryptocurrency sector, the move did mean that there will not be a blanket ban on trading any time soon.

But in recent weeks, as the tax proposal became law and more clarifications about its inner workings have come to light, the industry has had a backlash.

Many political and business leaders said that the new crypto tax law will deter investors from pouring money into the sector. In this story, we will see how it works and what impact it could have on the future of cryptocurrencies in India.

How does India’s cryptocurrency tax work?

There are two layers to India’s new cryptocurrency tax. First is the capital gains layer, where you have to pay a 30% tax on the money you have earned from trading digital assets.

This is pretty standard, and many countries like the US and UK have a similar form of tax structure for cryptocurrencies.

However, the problem is that you cannot offset your losses, even within cryptocurrencies. So, if you have lost Rs 1,000 ($13.13) trading Bitcoin and earned Rs 1,000 ($13.13) trading Ethereum, you will have to pay 30% tax on the money earned.

Union Finance Minister Nirmala Sitharaman.  introduce a tax on digital assets in India in February