Crypto investors were lucky, according to Nithin Kamath, the founder and CEO of Bengaluru-based digital trading startup Zerodha, because of TDS and taxes declared on cryptocurrency.
The unicorn’s CEO believes, in a recent statement, that many Indian crypto investors got lucky owing to the TDS and Tax on Crypto announcement in the February budget. The level of interest and engagement went down dramatically almost instantly.
He also said that many traders may have been caught attempting to purchase the dip and then averaging down if it hadn’t been for this, remarking in a tweet.
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What is the New Crypto Tax Framework?
A proposed structure of a fixed 30% tax on revenue from crypto assets goes into effect on April 1, 2022, signalling that this new framework will definitely have an impact on earnings garnered from cryptocurrency transactions.
The taxpayer will be obligated to pay a 30% tax on cryptocurrency trades made during the Assessment Year 2023-24, indicating that all earnings from the trade of VDAs (Virtual Digital Assets) in this financial year will be subject to a tax of 30%. Traders will have to pay a supplemental TDS tax of 1% with a limit or ceiling of close to half a lakh rupees per annum on all trading activities, on activities commencing from July 2022.
However, domestic crypto platforms have experienced a surge in traffic in the previous months that may be related to the government’s tax policy. Some traders may gain from cryptos as a result of the taxes, which makes crypto trading permissible.
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Investor’s Reaction to Kamath’s Twitter Post
Sunil Kumar, a Twitter account user, responded to Kamath’s viewpoint by asking if the same phenomenon is occurring with equity across the globe, why is crypto so individually and distinctly impacted?
The user also elucidated that when contrasted with other asset classes, equity may decline considerably this year. Traders caution to prepare for a sluggish, long-term, bear market, which has just begun.
Dr. Rajiv Agarwal, a Twitter user, responded to Kamath, disagreeing that crypto assets would now become like any other commodity listed on the market, but far riskier, much like small or mid-cap stocks.
Nithin Kamath’s Tweet on Crypto Tax
Other Twitter users also believe that crypto assets are gradually beginning to average down, which may cause a ripple effect on the market capitalisation, at large. To that effect, the global crypto market capitalization is $1.16 trillion, up close to 4% since last week.
Kamath also recently issued a warning to Indian cryptocurrency investors after Coinbase’s increased risk factor declaration sparked fear between all crypto investors.
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As per his tweet, he reported that customers could be threatened by the latest filing and there could be a risk of bankruptcy. He also said that this could have far-reaching impacts on the Indian crypto market as well, creating shockwaves throughout the trading industry.
However, most of these statements may just be speculation and the actual results of the taxation remain to be seen, crypto investors may now be hopeful that the regulation would bring about a more systematic, regulated trading process.
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Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.
