Given the government’s intention to protect small investors from excessive volatility, a higher tax rate is much warranted in crypto currency markets. Elaborate (200 Words)
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IAS Parliament 2 years
KEY POINTS
· Cryptocurrencies have been gaining momentum as the preferred trading and/or investing vehicle across the globe and at home.
· Budget 2022 defined cryptocurrencies under the broad umbrella of virtual digital assets, including DeFi (decentralised finance) and NFTs (non-fungible tokens).
· Further, 1 per cent TDS shall be levied against any transaction. Losses made on any transaction are not deductible against any other income.
· While investors have welcomed the recognition of cryptos as a digital asset by the government, some experts opine that the tax rate is high, which might hurt and deter small investors.
· The move to levy TDS is also welcome as this will ensure that government will be able to track all such transactions, thereby helping monitor money laundering activities.
· Further, this high tax rate may deter small, casual and uninformed investors from the market and save them from incurring huge losses.
· While a 30 per cent flat rate of digital tax seems high, it may not be a deterrent as far as big investors are concerned.
· A higher rate would do well given the risk-return profile while trading in cryptos and overall opaqueness concerning how the crypto prices work.
· Further, given the government’s intention to protect small investors from excessive volatility and cheating, a higher tax rate is much warranted.
Manish 2 years
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IAS Parliament 2 years
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