India slaps this Cryptocurrency ban on gains and losses

India has tightened cryptocurrency norms by disallowing losses incurred in a particular digital asset to be set off against income from another version of a crypto holding.

The cryptocurrency asset tax regime in India will gradually roll out in the financial year staring April 1. (Bloomberg)

India has tightened cryptocurrency norms by disallowing losses incurred in a particular digital asset to be set off against income from another version of a crypto holding, a MoS Finance said on Monday.   

The government won't allow tax breaks on infrastructure cost incurred while mining of crypto assets as it won't be treated as cost of acquisition, Minister of State for Finance Pankaj Chaudhary told lawmakers in parliament.

The clarification by the minister is a further set back to an industry that was slapped with a steep tax rate in the budget unveiled last month. India's central bank and the government are skeptical about the sector despite a rise in trading volumes as it fears digital currencies can be used for money laundering, terrorist financing and price volatility.

“Treating profits and losses of each market pair separately will discourage crypto participation and throttle the industry's growth. It's very unfortunate, and we urge the government to reconsider this,” says Nishcal Shetty, co-founder and chief executive officer of Binance-owned WazirX.

The crypto asset tax regime in India will gradually roll out in the financial year staring April 1. Provisions on the 30% tax will be effective at the start of fiscal year while those related to the 1% TDS will come into effect from July 1, 2022.