Finance Minister Nirmala Sitharaman will submit the country's income and expenditure forecast analysis on February 1. Given the strong influence of the government at the cryptocurrency level, India's cryptocurrency industry's demand for effective tax payment of virtual data assets (VDA) may not be heard, but there is still hope that she will provide some clear information in these aspects.

The Minister of Finance said in the next statement on the cost budget that she would implement a data encryption tax. The government levies a fixed tax of 30% on the earnings of cryptocurrency transactions.

High TDS cost of virtual data assets

Last year, the Minister of Finance further announced that the loss of one kind of cryptocurrency asset cannot be compensated by the profit of another kind of data encryption asset. The government also stressed that gradually from July 2022, cryptocurrency will charge 1% more TDS. The government announced in December 2022 that since July 1, it has obtained a total of 60.46 billion rupees from VDA transactions.

Many investors choose to conduct asset transactions in foreign exchange transactions without any deduction of 1% TDS system to protect their project investment. From February to October 2022, Chinese transactions were transferred to foreign exchanges, with a trading volume of about 3200 billion rupees. The government did not expect such a high percentage of transactions.

"The government has damaged a lot of TDS along with the transfer of transactions to international exchanges. Even if the interest rate of TDS is reduced, the target of tracking payment can still be completed."

Punt Agarwal, founder and CEO of KoinX, said that the cost budget is likely to reduce TDS.

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Exchange Handbook

When talking about many reforms and innovations he expected to carry out in the 2023 budget, he added that

"Some basic guidelines of relevant exchanges should be released."

He cited the example of the cryptocurrency transaction manual of Japan. In Japan, the assets of users and exchange operators must be separated. China Exchange must also manage 95% of its customers' cryptocurrency under the so-called "cold wallet" midline, so as to reduce the risk of loss under the premise of hacker attacks.

Mr. Agarwal also predicted that he would receive further response on tax payment of other virtual assets (such as NFT or mining related operations), so he didn't know these.

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