In the Union Budget of 2022, Finance Minister Sitharaman introduced a flat tax rate of 30% on all gains arising out of the sale of virtual assets. The Finance Minister had recently introduced a new tax regime for cryptocurrencies, which included a 1% tax on all transactions. This has led to widespread criticism from the crypto community in the country.
Some of the crypto community members claim that the new tax regime could be avoided by using cryptocurrencies’ decentralized exchanges, such as those operated by companies such as UniSwap and Pancake. However, this could not work as the existing regulations in the country remain in place.
In theory, this could be a valid reason to avoid taxes. However, it should be noted that using decentralized exchanges is not as simple as it sounds. There are a lot of factors that go into making a decentralized exchange work, and the risk falls with the investors.
Since the gains from the sale of cryptocurrencies are subject to taxation, investors would have to pay taxes on them even after converting them to fiat. According to Kashif Raza, a prominent influencer and crypto educator, the government should have issued a guideline to help implement the new tax regime. He also stated that using cryptocurrencies’ P2P and DEX methods to avoid taxes would not be a great idea. Every citizen in the country is required to pay taxes.
He stated that the government should have issued regulations related to cryptocurrencies first. Then, they should have proposed taxes. According to 5ire blockchain’s CEO, Pratik Gauri, the new tax regime could lead to grey markets and tax evasion in the country. He also stated that cryptocurrencies’ P2P and decentralized exchanges could be used to avoid taxes, which is similar to the idea of using cash to avoid income taxes.
One of the main reasons why cryptocurrencies’ decentralized exchanges and P2P markets would not work is because they would require investors to convert their gains to fiat at some point in time. Despite the lack of regulations and the government’s stance on cryptocurrencies, there are still some places in India that accept payments using cryptocurrencies.
One of these is Ardor2.1, a restaurant in New Delhi. A tattoo shop in the Greater Kailash area of Delhi accepts payments using cryptocurrencies as well. Despite the government’s stance on cryptocurrencies, many people still believe that using P2P and decentralized exchanges to avoid taxes is a tempting option. However, these methods are not without risks.
In a move that’s expected to benefit the blockchain community, the Etapalli subdivision of Maharashtra has decided to issue caste certificates using the platform LegitDoc. Shubham Gupta, the assistant collector of the district of Gadchiroli, announced on Monday that the caste certificates would be issued using the platform.
The platform will allow users to instantly issue caste certificates using the public blockchain. It will also help organizations verify the authenticity of the documents. In a LinkedIn post, the official explained that the Etapalli sub-division is located in a region that has a large tribal population. These areas require caste certificates to receive government subsidies and benefits.