Indian Tax regulators are reportedly exploring ways to bring income generated from crypto platforms operating outside India under the lens, sources familiar with the matter said.
According to a local news source, India’s Central Board of Direct Taxes [CBDT] is planning to impose a 20% tax deducted at source [TDS], an equalization levy on such transactions and interest income generated by Indians.
The new rules are targeted at those who have not submitted their PAN card details [Permanent Account Number], a unique ten-character alphanumeric identifier, an informed official revealed.
Speaking on the upcoming development, Girish Vanwari, founder of tax advisory Transaction Square noted,
“For the tax department tracking these transactions is very crucial. The government could slap a 5% additional tax in the form of an equalization levy on any transaction where one of the persons is not based in India and has not submitted their PAN card or other tax details. “
After the stiff tax came into effect, many Indians were on the lookout for alternative platforms to earn income from digital assets. At a time when decentralized finance started gaining a foothold, the proposed move might jeopardize the already tax-burdened crypto industry.
If that wasn’t enough, India’s IT cell now demands customer records should be stored for at least 5 years.
Indian IT body turns its attention to Crypto Exchanges
In a recent development, India’s IT body has directed, virtual asset service providers, virtual asset exchange providers, and custodian wallet providers to maintain all information obtained from the Know Your Customer [KYC] process and financial transactions records for a minimum of five years.
As per the press release, the Computer Emergency Response Team or CERT-In can demand this information for the purposes of “cyber incident response, protective and preventive actions related to cyber incidents.”
The department said this will help “ensure cyber security in the area of payments and financial markets for citizens while protecting their data, fundamental rights, and economic freedom in view of the growth of virtual assets.”
“Any service provider, intermediary, data center, body corporate and
Government organization shall mandatorily report cyber incidents to CERT-In within 6 hours of noticing such incidents or being brought to notice about such incidents,” it added.
The new directions would go into effect from late June, it said.