India eyes 20% taxation on DeFi gains

India's tax department wants to implement a 20% tax on DeFi gains that could be withdrawn from the source. 

India eyes 20% taxation on DeFi gains

India is looking to extend its crypto taxations to include gains made from decentralized finance (DeFi) activities. 

India's tax department was looking at how it could apply a 20% tax on the interest earned by Indians from crypto platforms that aren't based in the country. 

Indians would now have to pay taxes on earnings from deposits or trading activities in DeFi.

India's Central Board of Direct Taxes (CBDT) has reportedly been talking to tax experts on how it can implement this. there are also indications that the department is considering whether such transactions should also attract an equalization levy. 

The government could be looking to withdraw these taxes from the source. especially in cases where one of those involved didn't submit their PAN card details. 

Girish Vanwari the founder of tax advisory firm transaction said

“For the tax department, tracking of these transactions is very crucial. The government could slap a 5% additional tax in the form of equalization levy on any transaction where one of the persons is not based in India and has not submitted their PAN card or other tax details.”

DeFi has become one of the most popular ways for crypto investors to earn passively by borrowing or lending money to other users. the decentralized nature of this space may prove to be a stumbling block in the implementation of this new proposal

Indian crypto investors have turned to DeFi platforms after the government recently expand a 30% taxation on all crypto gains. 

Indian crypto investors are now focusing on DeFi platforms to help them retain most of their crypto earnings. 

Investors are more concerned about the 1% TDS, which will come into effect this month many industry stakeholders have stated that taxes could affect the liquidity of the market, which would affect the whole ecosystem. 

Read: Indian IT Ministry directs crypto exchanges require to collect user private information for 5 Years

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