Laws and regulations are ruining the crypto revenue for the government
There are strict laws and regulations on the usage of cryptocurrencies or investing in them. The government decided to impose a tax of 30% on cryptocurrency investment and also a 1% TDS on all crypto transactions. The thought process here was to make sure they had good control over the investments. But there are several other ways in which people can refrain from paying taxes to the government for their crypto transactions.
A few weeks back I read an article saying that the government lost a lot of money by introducing TDS on crypto transactions. People always find alternative ways to do their transactions and in most cases, the transactions happen from one wallet to another wallet without the visibility of the government banks or even FIAT currency. This is not even traceable because the wallets are not assigned to any individuals and there is no facility for a KYC.
There is a common feeling that many people still want to pay their taxes and keep things clean. At the same time, they would like to explore the world of cryptocurrencies and try to get some benefit out of it. The belief is that if the TDS on transactions and the tax percentage is reduced, many people would be willing to disclose their crypto assets and their transactions and pay their taxes if the tax amount is low. Only because the tax value is very high, people find alternative ways to evade taxes which is again another crime.
Moved transactions offshore
There was a study published recently that says that over 5 million traders have moved their crypto transactions offshore making it not visible to the Indian government. This also means that India has lost a huge revenue which is close to 420 million dollars because of this. It is believed that the traders were all forced to move out because the TDS was huge.
If the government is keen on increasing the transparency in crypto transactions, then the transaction fees should be 100% less compared to the current value of 1% TDS. For such a huge volume of transactions, even a 0.01% should be sufficient and people would be happy to disclose it to the government and pay their taxes well. This is a huge loss for the government and not just that but many people go offshore and have a huge amount of money in other countries which will be brought to India through so many other means.
Recommendation to relax crypto rules
There are recommendations coming from everywhere to ease the crypto rules and regulations. Not just the revenue part but many businesses are even hesitant to make use of this wonderful technology finding it hard to move the currencies around. It is believed that the government-introduced cryptocurrency might get some popularity and slowly with the help of that maybe the government would start relaxing the regulations or come up with a better plan.
The government cannot stay silent on this because a lot of money is going out to other countries and other offshore trading platforms because of this issue. The difficult thing here for the government is that it is not traceable because of decentralization. The regulations can be imposed only to a certain extent.
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One of the reasons that government is against cryptocurrency is because of the feeling that they are losing money and people are evading tax, as huge transactions go on from wallet to wallet without the visibility of the banks knowledge and no tracing of such wallets because of lack of KYC.
But the government cannot do anything about it because the future is going to be like that.
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they really want to destroy crypto as they know if they didn't , crypto is going to replace their banking system and they will have no way to hide their money.
That's why they are trying to introduce crypto into their banking system.
I myself was hearing in the news that the government of India is imposing a lot of taxes, it is completely wrong, then what will people do secretly and not pay taxes, then what will they do wrong things. It was better that less. A tax should be levied so that people do not have a problem in giving.
That's what is happening. People are doing it secretly.
Yeah you are right.
I will say to an extent one of the things helping crypto to stand is the laws and regulations just that the way government is mishandling it thinking they have control over the Crypto world is a loe
30% tax is too much it like working for the government, this alone is sufficient to discourage people from participating in crypto for people that want a clean sheet. The government should review and look into the issue they are losing money and their people is not free to practice and disclose their transactions on the crypto space. Crypto currency has really help a lot of people out of their poverty level.
Yeah I have personally seen many people improving their lifestyle with crypto. 🙂