Budget 2020 slapping a 30% tax on crypto income will hurt new investors: Experts

moneycontrol.com:

The crypto industry is having mixed sentiments after the finance minister announced a 30 percent tax on income from cryptos and other virtual assets. In a panel discussion held by Moneycontrol, the experts welcomed the move but raised a number of concerns on its impact on the industry.

Many argue that after years of speculation and discussions of a ban on cryptocurrencies, a clear tax regime is a step towards a more structured recognition for cryptos by the government. But, a 30 percent tax rate could discourage investors especially new ones from dabbling in an asset class that is still struggling for wider acceptance among governments globally.

Moreover, cryptos are now taxed on par with gains from speculative activities such as gambling, and lotteries, etc., putting the digital assets in the highest tax band.

Ashish Singhal, founder and CEO of one of the most valued crypto exchanges in India, CoinSwitch, sees this as a start but is hoping that the government may relook at the tax rate. “Definitely there is a sign that they want to deter people from trading but still want to see how this industry progresses. Overtime hopefully there could be amendments once the government sees how reducing the tax bracket could actually increase revenues by encouraging more investors to come in,” Singhal said.

Anoush Bhasin, founder of tax advisory firm Quagmire Consulting, echoed a similar view. “Usually it (high tax rate) is done for industries like betting, the Government wants to deter people from entering the space. Also, incidental deductions are not going to be allowed which is unfair. But, surely through recommendations and amendments, we will see a better tax bill going forward,” he said.

However, what is being seen as an important