Detailed Explanation of India's Encryption Asset Taxation and Regulatory Policies

1. Introduction

As the fifth largest economy in the world, India has made significant achievements in economic development in recent years. In 2023, India's GDP reached $3.53 trillion, surpassing the United Kingdom. The International Monetary Fund predicts that India's economic growth rate will reach 6.8% in 2024-2025. Despite the impressive overall economic performance, India still faces issues such as economic structural imbalances and uneven regional development.

2. Overview of the Basic Tax System in India

2.1 Indian Tax System

The Indian tax system is based on the Constitution, with the power to levy taxes primarily concentrated between the federal central government and the states. The central government mainly levies corporate income tax, personal income tax, goods and services tax, etc. State governments levy goods and services tax, stamp duty, etc. Local city governments impose property tax, utility usage tax, etc.

2.2 Corporate Income Tax

The basic corporate income tax rate in India is 30%. In addition, additional taxes and health education surcharges are required. Some enterprises can enjoy preferential tax rates, such as a 25% rate applicable to small and medium-sized enterprises. Non-resident enterprises are subject to a 40% tax rate. India offers tax incentives for multiple industries.

2.3 personal income tax

India's personal income tax adopts a classified comprehensive tax system with progressive tax rates. Residents are taxed on their global income, while non-residents are only taxed on income sourced from India. The tax rate ranges from 5% to 30%, with additional surcharges and health education cess. Certain incomes and benefits may qualify for tax incentives.

2.4 Goods and Services Tax

India implemented the Goods and Services Tax ( GST) reform starting from July 1, 2017. The GST rates are divided into five slabs: 0%, 5%, 12%, 18%, and 28%. Most goods have a tax rate below 18%, while specific luxury and harmful goods are subject to a 28% tax rate and additional taxes.

3. India's encryption asset taxation system

3.1 Overview of India Encryption Tax

India has imposed a tax rate of 30% on profits from encryption asset trading starting from April 1, 2022. In addition, a 1% Tax Deducted at Source (TDS) is levied on the transfer of encryption assets exceeding a certain amount (.

) 3.2 Specific Application of Encryption Tax

A tax rate of 30% applies to the sale of encryption currencies, trading with encryption currencies, and using encryption currencies for payments. Certain situations, such as mining and wage payments, are taxed at the personal income tax rate.

3.3 Source Deduction Tax###TDS(

India levies a 1% TDS on the transfer of encryption assets. Exchanges are responsible for withholding TDS, while P2P transactions are the responsibility of the buyer. Certain individuals may be exempt from TDS within a specific transaction limit.

) 3.4 Tax regulations related to losses and losses

Cryptocurrency losses cannot be used to offset other gains. Currently, there is no clear tax treatment guidance for lost or stolen cryptocurrencies.

4. Overview of India's Encryption Asset Regulatory System

India currently lacks a comprehensive cryptocurrency regulatory framework. The government's attitude towards cryptocurrencies is inconsistent, and relevant bills have been postponed multiple times. The industry is beginning to push for self-regulation, and some exchanges have implemented strict KYC and AML procedures.

India has implemented tax and anti-money laundering measures to partially regulate the encryption industry. In 2024, Binance successfully registered as a reporting entity in India, marking a significant advancement in the regulatory environment.

5. Summary and Outlook on India's Encryption Asset Taxation and Regulatory System

India currently primarily manages encryption assets through tax measures. In the future, more comprehensive regulatory policies may be introduced to balance financial security and innovative development. Tax compliance and anti-money laundering will be key factors for the sustainable and healthy development of India's encryption asset ecosystem.