Cryptocurrency industry leaders are mulling moving court over reduction of taxes, according to a report.
Finance minister Nirmala Sitharaman last month announced that cryptocurrencies would be subject to a 30% capital gains tax, a 1% tax deducted at source (TDS), no loss offsetting, and taxes on gifts.
As reported by CoinDesk, an unnamed executive of a major crypto exchange said: “It seems so. This is what’s most realistic and probable. We could see changes in the fine print but not expecting any changes to the major policies.”
The industry has been pressing for tax reductions during informal negotiations with the government. Several such encounters with decision-makers were verified by executives from other exchanges.
Another unnamed industry executive said: “We had four meetings, three of which were only to submit information and discussion was not allowed. In one meeting, there was a discussion and when we mentioned the issue of the 1% TDS. We were told you should worry about GST (Goods & Services Tax) as that may be a bigger concern for you.”
At least three top executives from different crypto exchanges revealed that exchanges have discussed the Supreme Court option, but no decision has yet been made. If this happens, it would take the form of a public interest litigation (PIL).
“That is the legal way to go. But it won’t be a single exchange. It would have to be a collaborative effort, including crypto exchanges, NFT platforms, and blockchain companies, as everyone will be affected,” said one executive.
Some companies may choose to ignore the legal challenge as they have taken a collaborative and symbiotic approach” to regulating rather than “an aggressive approach”, according to two executives from separate exchanges.
According to another executive, exchanges that have been closely collaborating with the authorities may continue to seek favourable regulation through education and conversation.
Others say that while the 30% tax is unlikely to be cut in the coming fiscal year, the government will have to make changes shortly. Such a high tax rate will not function permanently, claimed one of the exchange’s founders.