Crypto tax doesn't legalize trading, says Indian tax department chief

The Indian tax department said crypto taxation will help the department evaluate the exact depth of the digital asset market.

India's Central Board of Direct Taxes announced a 30% tax on cryptocurrency holdings. The tax on cryptocurrency doesn't make it legal to trade in India.

On February 01, 2022, in the budget session, the finance minister of India announced a 30% tax on cryptocurrency holdings initiating many headlines on the lines of "Crypto Legalizes in India." However, CBDT chief JB Mohapatra aimed to disprove these fallacies.

In a post-budget presser, Mohapatra states that the new crypto tax would support the income tax department in measuring the profoundness of the digital currency market in the country. He also emphasized that levying a tax on the developing crypto market doesn't legalize trading. He explained:

"The crypto trade transactions do not become legal or regular just because you have paid taxes on that."

However, he explained the tax imposition asserting it would help the department track unlawful exercises associated with digital assets. Regulating the crypto market will help them track money flow moving in and out of the digital asset ecosystem.

Related: India to introduce 30% crypto tax, digital rupee CBDC by 2022–23

Indian crypto exchanges head named the 30% tax progress, saying that the government comes a long way from its earlier days when it was looking to set a veil ban and jail periods for crypto-related transgressions.

After facing backlash from retail market operators, Thailand recently quashed its 15% tax proposal on crypto transactions. South Korea also delayed its 20% tax proposal due to a lack of clarity on crypto regulations.