Blockchain and Crypto Assets Council (BACC) said that the proposed section 115BBH of the Income Tax Act of 1961, which states that “loss from the transfer of VDA (Virtual Digital Assets) will not be allowed to be set off against the income arising from transfer of another VDA”, will have a negative impact on investor behaviour and tax collection.
Ashish Singhal, Co-chair of BACC and Founder-CEO of CoinSwitch Kuber, said, “We fear the lack of provision to offset losses will drive away users from KYC-compliant exchanges and platforms to the peer-to-peer grey market, which would defeat the purpose of the new tax. The Budget recognised virtual digital assets (VDAs) as an emerging asset class. Therefore, a natural course of action would have been to progressively bring the regulations at par with other asset classes. Instead, yesterday, with this clarification in Parliament, we have taken a step backwards. If a regressive provision such as this would have been applicable in equities, it would have discouraged retail investors from participating.”
On par with share trading
Sumit Gupta, Co-chair of BACC and Founder-CEO of CoinDCX, said, “The lack of an opportunity to offset expenses and carry forward losses will act as a deterrent for small businesses and will hamper wider adoption. While the government has allowed carrying forward losses in the shares trading business, crypto trading should have been given the same treatment.”
BAAC, formed in 2017, is a not-for-profit association under the aegis of the Internet and Mobile Association of India. It represents the interests of the crypto ecosystem in India. The committee believes in supporting a regulated environment for crypto ecosystem development in India. BACC currently has more than 30 members and its membership is open to all stakeholders of the crypto ecosystem in India such as crypto exchanges, NFT companies, NFT artists, crypto investors and law firms.