India is falling into a paradox: taxing cryptocurrency as legal but still lacking a clear legal framework, causing investors and businesses to shift operations abroad.
As many countries move from skepticism to specific plans for digital assets, the policy regarding Virtual Digital Assets (VDA) in India remains inconsistent. High taxes accompanied by limited investor protection and insufficiently specialized anti-money laundering mechanisms are increasing risks and capital flight.
MAIN CONTENT
India imposes high VDA taxes but lacks a corresponding legal framework and investor protection.
Many investors, trading volumes, and crypto startups are shifting to markets with clearer regulations.
The central proposal is to legalize VDA as a type of asset, build a sandbox, and tighten AML to bring activities back domestically.
High taxes but lack of legal protection are pushing risks towards crypto users.
Investors in India must bear a 30% capital gains tax and a 1% TDS for each VDA transaction, while the market still lacks clear rules and corresponding protection mechanisms.
The government currently taxes VDA as if it has been fully recognized, but the management approach is cautious, viewing this as a risky or discouraged sector. As a result, users pay significant taxes but do not receive equivalent protection standards in issues such as exchange transparency, dispute resolution, or accountability in cases of fraud.
