India, Crypto, Web3 and Taxes — An Honest Review of the Current Tax System and its Impact on Youth.

Although I stay miles away from media, news and politics for the sake of my mental peace but I thought to write this article reviewing the newly introduced crypto tax bill in India and how this will effect India in long term.

Unless you are living under a rock, you might be aware of the newly introduced crypto bill in India which is supposed to take 30% of the crypto profits along with 1% TDS (Tax deducted at source) with no set-offs for losses (Yeah, you read it right! NO SET-OFFS FOR LOSSES). Before I proceed further, I want you to know that this tax rule is almost same as those for gambling and lottery winnings. So the Government is basically seeing crypto as a gambling or lottery (which is fine, I mean, we all have that uncle in our family who says that investing in stocks is gambling because they know nothing about the stock market).

The first part of the tax system is supposed to cut 30% of the profit you make through crypto trades with no set-offs for losses. That mean, if you invest Rs 1000 in bitcoin and it gives net profit of Rs100 in an year, you will be paying 30Rs as tax and if you further invested your 1070Rs and suffer a loss, you won’t be able to adjust the loss against the profit you made. So it’s like, if you win, government will win and if you lost, it’s just your loss. This rule is actually a big blow for traders in India as 30% itself is actually a big bite of the butter and no set-offs for losses is additional nightmare.
This also implies that if you receive your sallary in crypto, you will be paying a flat 30% to the government. I know a friend who has no house to live, studies in a private college and works hard as a web3 article writer and ends up earning 500 USDT(Rs 37,000) per month. He has to manage his family expenses, his own bills and college fee but now he has to pay a flat $150 (Rs 11,100) out of his hard earnt money. If this isn’t exploitation, I don’t know what else is.

Now, apart from that 30% tax on gains, you are also supposed to pay 1% TDS on every transaction. India is actually world’s first country to impose TDS on crypto transaction. This 1% TDS alone is enough to close all doors of innovation in crypto space in India. If you send 1000Rs to friend in Bitcoin, you will have to pay 10Rs as tax (apart from paying gas fee to the miners of the network). To be honest, this is just complete greed of the government. That’s it.

I recently saw news (which I do once in a blue moon) and found some old aged uncle talking shit about crypto. Well, like everyone, he too didn’t seem to understand the blockchain technology and its possibilities. These are few questions he put on the news channel which I am gonna answer here:

1. Crypto is used for money laundering

To be honest, if I were to launder money, I would choose fiat and not a token on open and traceable ledger where everyone can see each and every transaction of mine. Problem with laundering money using crypto is that, YOU WILL BE CAUGHT IN THE END! Criminals love cash! If someone earns money illegaly, they would not want to show traces and if they use crypto currency as medium of transaction, it will be like open invitation to investigation department to go after them. Also, fiat is 800x more used than crypto for money laundering according to this article

2. Crypto is used for Terror funding

Yes, crypto can be used for terror funding but so can be fiat (and 30% tax doesn’t solve this problem anyways). And at the end of the day, terrorist organizations will need to have fiat to function properly and this is where regulated exchanges can partner with government agencies to trace such criminal activities. Crypto is like fire. You can use it to cook food or use it to burn whole village. Terrorists also use Internet for source of communication, but will you just raise price of Internet data?

3. Crypto industry is full of frauds

Yes, crypto industry is full of frauds. 99 out of 100 projects/coins you see is nothing but scam. But hey, where there is value, there is fraud. Talking of frauds, India loses 100 Crore ($14.2M) everyday to banking frauds according to this news of Times Of India. Do anyone knows how those frauds happen and where all that money is right now? You can’t! Because you really can’t trace fiat easily. Crypto is traceable.

4. Too volatile to be called as currency

Oh well, crypto isn’t currency at all (Now don’t mock me for writing “crypto-currency” in this whole article). To be honest, “crypto-currency” is more like a misnomer. Those who know this industry very well consider crypto as an asset. Now don’t say crypto is too volatile to be called as an asset.
FANG stocks these days are way more volatile than BitCoin or Ethereum.

5. Crypto has no intrinsic value

One person’s belief or opinion don’t decide what the market values. If I were to take 2000Rs note to the age where Barter system was a thing, they wouldn’t give me anything in return for something this current world values a lot. Crypto Industry is now worth more than $2 Trillion dollars. This is why I see value in crypto:

• Trustless and permissionless transactions around the world in few seconds. I was 15 when I received my first payment and it was from US. I couldn’t set up my PayPal account because I wasn’t 18 so I had to take help from a friend of mine and then was successful in receiving the money after paying big chunk as some taxes I didn’t understand and paypal fee.
• Crypto unites the world. It’s a world where religion, caste, gender or age doesn’t matter. I have worked for so many web3 startups and none of them even care to know my full name.
• So many decentralized products and platforms are being build around it. Imagine using a social media platform owned by no private corporation but by the users! Yes, web3 solves this.

Who is going to suffer the most from this crypto tax rules?

India as a country itself. To be honest, whales who hold the most crypto won’t pay even a single $ as tax and they will probably leave the country and settle somewhere near a beach in Miami. Web3 startups and their founders are already leaving India and Dubai seems like the web3 capital of India. This brain drain has already begun. There was possibility of India leading the web3 world but it looks like blunt decisions by the government has closed almost every doors.

Whales will be uneffected, startups will work outside India, skilled professionals in web3 might leave the country as well. Talking of myself, web3 has drastically changed my life in an year. You can refer to this article to know more about me and what I do.
People who will suffer the most from the tax rules:

• Middle or lower class working professionals who work hard in web3 to earn their livings (I gave an example of my friend earlier in this article)
• Thousands of upcoming Adityas from India who will be devoid of the opportunities I got.

I am sure Indians are GMI but India as country will NGMI (No, that ‘N’ is NOT supposed to mean the FM of India) in web3.

But anyways guys, crypto is bad because it’s “gambling” but you can always play bet at 1Xbet.com! Government, Cricket control board and famous cricketers like Suresh Raina are promoting it during IPL. Leave all this blockchain development courses and web3 and sign up at 1xbet.com to be the next Suresh Raina. You can also be Rishabh Pant if you sign up at Dream11.