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Author: taxdao
1. Introduction
The Republic of India, the largest country in South Asia, has a land area of about 2.98 million square kilometers, ranking 7th in the world, with a population of 1.44 billion.Since 2021, India has become the world’s fastest growing large economy, with an average economic growth rate of 6.5%, twice the global average. Based on the estimated data of the International Monetary Fund (IMF), in 2023,India’s GDP reaches $ 3.53 trillion, surpassing Britain to become the fifth largest economy in the world.In April 2024, IMF raised India’s economic growth forecast from 6.5%to 6.8%from 2024-2025, because the domestic demand in India and the increase in labor age.In recent years, most of the Indian economic activities have been driven by investment. The annual investment accounted for GDP’s proportion of GDP from 31.6%before the epidemic to 33.7%of 23 years.Growth and slowdown of external demand.In addition, the attractiveness of investors in the Indian market has grown simultaneously.Morgan Stanley analysis believes that the Indian stock market has become the fourth largest stock market in the world and is expected to become the third largest stock market in the world by 2030. Multinational companies’ confidence in Indian investment prospects is at the highest level.However, India also has obvious imbalances. The total GDP is very different from the per capita GDP. The economic structure and the industrial structure are seriously inclined, and the national living standards between regions.From the overall level, India is already the fifth largest economy in the world, but from the perspective of per capita levels, it is still hovering around 140th, far lower than China, Mexico, South Africa and so on.
2. Overview of the basic tax system in India
2.1 Indian tax system
The Indian tax system is established based on the regulations of the Indian Constitution. According to Article 265 of the Indian Constitution: “Without the authorization of the parliament, it is not administrative in administrative.”India’s tax collection rights are mainly concentrated between the central government and the state of the state. The local city -level governments are responsible for a small amount of tax collection.The two categories, direct taxes are mainly composed of corporate income tax, personal income tax and property tax. Indirect tax mainly includes goods and labor taxes and tariffs.India’s taxes are mainly managed by the Indian Revenue Service (IRS). Its centralized tax bureau’s direct tax related income tax and property tax are managed.Manage India’s customs and central consumption taxes, service tax and other indirect taxes.The state government mainly levies goods and labor taxes, stamp tax, state consumption tax, entertainment gaming tax, land income tax, etc.In areas where cargo and labor taxes are not covered, such as oil products and liquor, they continue to levy original taxes such as VAT (non -value -added tax state -to -value -added tax).The taxes levied by local city governments mainly include property taxes, market taxes, as well as public facilities such as water supply and drainage.
Indian taxation is strictly followed by tax legalism.Because Indian law adopts the British and American Law Department (General Law/Ocean Law), although the Indian Tax Law (Development Law or Passmark) has been continuously increased and improved, it is still subject to the interpretation of the case law.The case law generally refers to the legal principles or rules established in the judgment of the high court. This principle or rule has a binding or influence on the judgment of future tax cases.
2.2 Corporate income tax
In India, enterprises should pay corporate income tax for their income.India does not have a separate capital profit tax, and capital gains are included in the taxable income of corporate income tax.The “Income Tax Law” in 1961 stipulates the minimum alternative tax, dividend tax and repurchase shares allocation tax. The “Financial Law of 2020” abolished the dividend distribution tax and changed the income tax of the dividend income in the hands of shareholders.1st to March 31 of the following year.
Resident enterprises refer to enterprises registered and established in India and their actual management agencies are located in India. The location of the actual management institution (Poem) is the location of a key decision and a business decision for the overall operation of the enterprise.
The income tax should be divided into 4 categories: ① business profit or income; ② property income, including self -use, rental housing, and commercial housing. If the property is used in the company’s business operation, it does not belong to this category; ③ capital gains; ④ income from other sources, including lottery bonuses, competition bonuses and securities interest.The game includes horse racing, card and other gambling games.Duty exemption income includes: ① the share income of partnerships; ② long -term capital benefits; ③ overseas labor income; ④ government bond income; ⑤ relief fund income.
The basic tax rate of corporate income tax for domestic enterprises is 30%. In addition, enterprises should also pay corresponding surcharges and health education additions according to corporate income tax.Some enterprises apply to specific preferential tax rates: (1) SMEs with total turnover or total income of less than 4 billion RS apply 25%of corporate income tax rates without enjoying tax exemption or discounts; (2) March 2016The registered production, manufacturing, R & D enterprises and supporting enterprises have applied for a 15%corporate income tax rate without enjoying tax exemption or discounts, and paying 10%of surcharges; (3) R & D in China (3)According to the 1970 Patent Law, at least 75%of the R & D expenses occurred in India) and registered patents obtained a 10%corporate income tax rate; (4) Limited liability partnerships in territory applicable to 30%of the corporate income tax rate, Consistent with the partnership of illegal persons; (5) Foreign enterprises and limited liability partnerships established by foreign enterprises and overseas apply 40%of corporate income tax rates, waiting.
Non -resident enterprises and their branches usually apply 40%of corporate income tax rates, adding 2%(if net income exceeds 10 million RS but does not exceed 100 million RS) or 5%(if net income exceeds 100 million RS) additional taxes, And pay health education at 4%of the taxable amount.
India offers many preferential tax tax policies, including all or partial tax exemptions, reducing tax rates, tax refund, accelerated depreciation or special deductions.The industries with tax discounts are relatively wide, including export -oriented enterprises, free trade zones and science and technology park industrial operations, infrastructure construction, hotels, tourism industries, research companies, mineral oil production, cold chain facilities, shipping, shipping, shipping, shipping, shipping, shippingAnd aviation transportation, tea/coffee/rubber industry, news institution and waste treatment business.For example, new enterprises that make products or provide services in the Special Economic Zone are eligible to obtain a number of tax benefits, including 100%tax exemption of profit and income in the first 5 years, and 50%of the profit and income within the next 5 years;In some conditions, the tax exemption can be exempt from 50%in the next 5 years; approved developers can get a long period of tax exemption.
2.3 Personal income tax
Indian residents’ income worldwide needs to pay taxes.对于居住在印度但不属于普通居民的个人，仅须为其在印度获得的收入、被视为在印度发生或取得的收入、在印度收到的收入，或者虽然在印度境外收到，但来Liberty Indians pay income taxes or pay income taxes for companies established in India.
Non -Indian residents only need to get income obtained in India and pay taxes that they receive, occurred, or obtained in India. Non -Indian residents may also have income in India through corporate relations,The income obtained, or income tax taxes obtained by transferring assets (including companies established in India) in India.
In India, income is taxed at the hierarchical system.The income tax of foreign citizens in India is determined according to its tax residential status. According to the personal status and income level of individuals in India according to the “Income Tax Law” in 1961, personal income is levied at a progressive tax rate.Non -employment income is levied at the type of income according to the type of income.The personal income tax of residents is a classification comprehensive tax system, and the progressive tax rate is implemented.Calculation method: Taxpayers will reduce tax incentives after total income (salary income, real estate income, business income, capital benefits and other income), tax -free income, pre -tax deduction projectsThe balance of charity donations) and the balance after the previous year’s losses allowed to make up are taxable income.The taxable amount after taxable income is the taxable amount after excessive tax rate.On this basis, after calculating additional taxes, educational additions, and medium or above education additions, the total tax should be taxable for income tax.Non -resident taxpayers must pay pre -income tax at the same tax rate of residents’ taxpayers. If the annual net income exceeds 10 million RS, it will need to pay 15%of surcharge and 4%of health education additional.
Personal income tax rate
According to specific requirements, the following benefits can enjoy preferential tax benefits: (1) the housing provided by the company;EssenceThe following items paid by the employer should not be included in the employee’s tax payable: (1) the medical expenses for reimbursement; (2) the Indian retirement welfare fund payment, including the provident fund, pension and pension fund.Some allowances (including rental allowances and holiday travel allowances) can be exempt from taxable, or the taxable income amount is included in a lower value, but it must meet specific conditions.The additional allowances paid at the beginning or end of the employment must be included in taxable compensation.The tuition and miscellaneous fees for the full -time education of life insurance premiums, social security funds, and the full -time education of universities, colleges, or other educational institutions can be deducted from income, up to 150,000 RS.
2.4 Cargo and labor tax
The predecessor of the Indian goods and service tax was sales tax. The sales tax was levied on the Bond, Inter -State Sales, and Import and Export Trade in 1956, and replaced the sales tax in 2005.Since July 1, 2017, VAT has been replaced by goods and labor taxes (GST). After India has implemented the reform of goods and labor tax (GST), the goods and labor taxes include VAT (VAT), central consumption tax, vehicle vehicles, vehicles, and vehiclesTaxes, goods and passenger taxes, power taxes, entertainment taxes and other taxes.Cargo and labor taxes are an indirect tax and a transaction -based taxation system.At present, some products are still not within the scope of goods and labor taxes, such as gasoline, diesel, aviation turbine fuel (ATF), natural gas, alcohol and crude oil for human consumption.Cargo and labor taxes are a comprehensive tax on the supply of all goods and services, similar to VAT.
At present, the basic tax rates for cargo and labor taxes have 4 grants, namely 5%, 12%, 18%, and 28%. The tax rate per grade is CGST and SGST’s total tax rates, that is, the two are levied 50%each.0.25%and 3%of the tax rates are suitable for diamonds, unprocessed gems, and small amounts of goods such as gold and silver.Therefore, if it does not include zero tax rate for exports, India’s GST actually has a tax rate of 6.In addition, in addition to the above -mentioned goods and service tax rates, the goods and service tax laws also levy additional taxes on sales of certain goods (such as cigarettes, tobacco, inflatable water, gasoline and motor vehicles), ranging from 1%to 204%.The tax rate of most products is below 18%. The 28%tax rate is applicable to specific luxury goods and harmful products, and an additional tax is also required.
3. India’s encryption asset tax system
3.1 Summary of Indian encryption tax
The Indian Income Taxation Department (ITD) introduced Article 2 (47A) in the Income Tax Law, defining virtual digital assets (VDA). This definition is quite detailed, covering all types of encrypted assets, including cryptocurrencies, including cryptocurrencies, NFT, tokens, etc.
In the budget of 2022, the Minister of Finance introduced the 115BBH clause. From April 1, 2022, the tax rate was levied by 30%of the profit obtained by transaction cryptocurrencies (plus applicable surcharges and 4%of 4%Sattle fee).This tax rate is consistent with the highest income tax level in India (excluding surcharges and surcharges), which is suitable for private investors, commercial traders, and anyone who transferred crypto assets within a specific financial year.In addition, regardless of the nature of income, the 30%tax rate will apply to all income, which means that whether it is investment income or commercial income, there is no difference in short -term and long -term income.
In addition to the 30%tax rate, another Article 194S also stipulates that starting from July 1, 2022, if the encrypted transaction exceeds RS50,000 in one fiscal year (or RS10,000 in some cases), then it is RS10,000), then RS10,000), then RS10,000), thenThe transfer of 1%deduction tax (TDS) of the transfer of encrypted assets to ensure that all encrypted transactions are tracked.Duty -free behavior includes: holding cryptoling; transferring cryptocurrency between your own wallets; receiving cryptocurrencies with a value of less than RS50,000; cryptocurrencies with any amount from direct relatives.
Indian investors need to declare their income as capital income (if the assets are held as an investment) when trading the cryptocurrency/NFT, or declare it as a commercial income (if the asset is used for transactions).From the fiscal year and after the 2022-2023, an attachment of the income tax declaration form is specially used to report the encrypted currency/NFT income, called the “Schedule -Virtual Digital Assets”.This attachment continues to apply for the application form of fiscal 2023-2024.
3.2 The specific application of encryption taxes
When conducting the following transactions, you need to pay 30%of cryptocurrency: sell cryptocurrencies to India RS or other legal currencies; encrypted transactions with cryptocurrencies, including stable coins; use cryptocurrencies to pay products and services.However, an encrypted assets are not always applicable to 30%of the tax rate. Sometimes the income tax department regards it as other income. In these cases, the tax will be paid according to the personal income tax level (see 2.3)(Such as the gift); mining cryptocurrency; paying wages with cryptocurrencies; pledge rewards; airdrops.Selling, transactions, or using these cryptocurrencies may need to pay 30%of the taxes for the profit.
ITD has not issued specific guidance on DEFI transactions. It needs to refer to the existing income tax law clauses. The following DEFI transactions may be levied at the personal income tax rate at the time of receipt: to obtain new token, govern token or reward through liquidity mining mining, govern token or rewardTokens; Recommended rewards; game earning income; browsing earning platform income, such as Permission.io or Brave.Even if the tax has been paid when it is received, if you sell, exchange or use these tokens in the future, you need to pay a 30%tax for profit.
3.3 Source deduction tax (TDS)
In India, investors should pay 1%of the source deduction tax (TDS) for the transfer of assets.TDS is a tax levied at the source. The main reason for introducing 1% TDS is to capture the transaction details and track the investment of Indian investors in encrypted assets.Regarding TDS, there are a few points to pay attention to: TDS is suitable for trading after July 1, 2022; when trading on the Indian exchange, TDS will be deducted and paid by the exchange to the government; when trading through the P2P platform or international exchange,The buyer is responsible for deducting TDS; in the transaction between cryptocurrencies, TDS will levy 1%of the buyers and sellers.
It should be noted that if the transaction value is paid by “specific person” and the total value of its encrypted transaction activities does not exceed RS50,000 within a financial year, there is no need to deduct TDS.A specific person refers to individuals or HUF (Indian United Family).If the trader does not have the previous financial annual business income, or its sales/total income/business income does not exceed RS 1.1 billion, or its sales/total revenue/professional income does not exceed RS.5 million, the TDS limit will be reduced from RS50,000 to to RS50,000 toRS10,000.
If a transaction is conducted on the Indian exchange, the TDS requires that the exchange will be completed directly, so there is no need to operate when taxing.However, in the P2P and International Exchange transactions, the responsibilities of paying and applying for TDS as a specific person are as follows: In the P2P trading and international exchange transactions, TDS needs to be submitted through FORM 26QE within 30 days after the deduction month.At present, this form has not been provided on the income tax portal website. Therefore, investors need to wait for ITD to clearly explain how to deposit TDS. All non -specific people need to obtain the TAN number, submit FORM 26Q in the quarter, and will be submitted for quarterly.Pay the TDS tax.In addition, the total taxable payable can be reduced by applying for TDS credit when reporting taxes.
3.4 Losses and Loss Related Tax Regulations
According to the 115thBBH clause, the loss of cryptocurrencies is prohibited to deduct the income of cryptocurrencies or any other income or income.India’s crypto investors cannot declare the cost of cryptocurrency, unless the cost of asset acquisition/buying price.
The Indian income tax department (ITD) has not yet given clear guidance to the loss or stolen cryptocurrency, but according to the Indian court’s decision on other assets or theft of other assets, cryptocurrencies caused by hackers, fraud or thefts usually do not requirePay tax.However, in view of the strict regulations of ITD’s deduction of cryptocurrency losses, it is difficult for investors to claim losses due to losses or stolen crypto assets.
4. Overview of Indian crypto asset supervision system
The Indian cryptocurrency industry is experiencing a period of uncertainty, which is not only reflected in the lack of comprehensive regulatory frameworks at the national level, but also reflected in the regulatory agency’s attitude towards cryptocurrencies.The Indian Encryption Act is considered a thing that may change the rules of the game. It is expected to pave the way for digital currencies issued by the Indian Reserve Bank (RBI), implying a progress, which may make India walk in the central bank’s digital currency (CBDC) revolutionary revolution.The forefront.However, the reality is much more complicated. After years of brewing of this bill, this bill has experienced many modifications and delay. So far, the content is still unclear. There is a contradictory of its position in private cryptocurrencies.
The process of the bill reflects the struggle to effectively monitor digital assets globally.Although governments of various countries have seen the potential of blockchain technology and digital currencies, concerns about financial stability, investor protection, and preventing illegal activities are still great.A recent statement of the Indian Ministry of Finance further exacerbated the complexity of this situation. The Ministry of Finance said that there is no legislative proposal to regulate digital asset transactions. In view of the discussion of the Cryptocurrency Act,The statement surprised many people.This obvious contradiction shows that the Indian government has different views on cryptocurrency supervision, and also highlights the challenges faced by policy makers in keeping up with the rapidly developing cryptocurrency field.
In view of the top -down regulatory challenges, India’s cryptocurrency industry has increasing support for self -supervision.This method can find an intermediate position between unrestrained market freedom and strict government control. The self -supervision of the cryptocurrency field may involve industry -led measures to establish the best practice, implement strong KYC and anti -money laundering(AML) program and establish a consumer protection mechanism.By actively solving regulatory problems, the encryption industry can show its commitment to responsible growth and may alleviate some concerns of the government.
In fact, some Indian cryptocurrency exchanges have taken the pace in this direction.For example, a large -scale cryptocurrency exchange WazirX in India has implemented strict KYC programs and cooperated with law enforcement agencies to prevent illegal activities.However, self -supervision may not be able to fully solve all regulatory problems and may lead to conflicts of interest.Despite these challenges, self -supervision may still play a key role in the short term to mid -term, especially in the case of the uncertainty of the current supervision.
Although India may lack a comprehensive cryptocurrency regulatory framework, it has taken measures to supervise the industry in some form of supervision, which are mainly tax and anti -money laundering measures.In terms of taxation, it has been described earlier, including 30%of taxes on cryptocurrency transactions and implemented the source withdrawal tax (TDS).In terms of anti -money laundering, cryptocurrency exchanges operating in India must abide by the “PMLA” (PMLA).These measures represent a pragmatic attitude of cryptocurrency supervision. By focusing on taxation and anti -money laundering compliance, the government has found a method that can implement certain control on the cryptocurrency industry without clear legalization or prohibition of cryptocurrencies.
In 2024, Binance, one of the world’s largest cryptocurrency exchanges, announced that it has successfully registered as a report entity in India, which marks an important turning point in India’s cryptocurrency supervision.Binance complies with India’s anti -money laundering (AML) standard, which is consistent with the government’s focus on the focus of illegal activities in the field of cryptocurrencies.Therefore, Binance’s successful registration may become India’s catalyst for more comprehensive cryptocurrency supervision. Global cryptocurrency participants may develop business within India’s regulatory framework and may encourage the government to formulate more detailed guidelines for the industry.
5. Summary and outlook for the taxation and regulatory system of India’s encryption assets
Although India has not yet established a comprehensive encrypted asset supervision framework, it has preliminarily managed it through taxation.In other regulations, despite the lack of specific legislation, some exchanges have taken self -regulatory measures to implement strict KYC and AML programs.
Looking forward to the future, with the development of the global encryption market, the Indian government may launch a more complete regulatory policy.International participants, such as Binance, have successfully registered for India’s reporting entity, showing their willingness to adapt to the local regulatory environment, which may promote the government to formulate more detailed guidelines to achieve a balance between financial security and innovation.At the same time, tax compliance and anti -money laundering will be the key factor in the sustainable and healthy development of the ecological and healthy ecosystem of India.For countries, the development of cryptocurrencies is a process of continuously adapting to technological development, balanced innovation and risks, and gradually integrating with international standards, and strive to establish a more stable and mature market environment to promote the healthy development of the cryptocurrency industry.
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