Latest findings from a survey by a tech policy think tank reiterate its suggestion that India should consider revising its taxes on crypto.
The study also found that India’s anti-money laundering rules were not sufficient to reverse the impact of the high taxes on the crypto industry.
India should consider revising its taxes on crypto and not depend on its anti-money laundering rules to reverse the impact of those high taxes, the latest survey of savvy Indian investors by a New Delhi-based technology policy think tank revealed.
The study by the Esya Centre also found that Indian investors are considerably aware of regulations relating to the taxation of cryptocurrencies (58%) and money laundering (52%), and prefer collateralized stablecoins (93%) over algorithmic ones.
The survey was conducted in March and April in five urban cities: Ahmedabad, Bengaluru, Delhi, Jaipur, and Lucknow and focused on 1,342 highly educated respondents.
Critically, the study found that India’s “anti-money laundering law has led to a shift in favor of equity investments compared to crypto investments (by 8 percent).”
Since last year, India has required crypto businesses to register with the Financial Intelligence Unit (FIU), the country’s anti-money laundering unit, to comply with processes under the Prevention of Money Laundering Act (PMLA).
Despite evidence-backed studies by Esya and others calling for reduction, India has kept high crypto taxes unchanged since introducing them in 2022.
Esya’s latest survey found that knowledge of the “tax regulations not only increases investment in crypto assets (by 10 percent), but also investment via foreign crypto platforms (by 15 percent).”
That trend was reversed to some extent once India blocked as many as nine off shore exchanges, some of which have now been registered in India.
The survey found that some Indian investors were circumventing offshore exchanges’ URL blocking, suggesting that the anti-money laundering laws were not “sufficient to reverse or neutralize the impact of tax regulations.”
Thus, the think tank reiterated its suggestion that the government should “consider revising the tax rules for crypto assets to prevent offshoring” and that “future attempts by the government to nudge consumers to engage responsibly in the crypto asset market should be in consultation with crypto exchanges.”
All the respondents considered crypto assets to be very attractive as an “additional investment opportunity and for cross-border transactions,” while NFTs and stablecoins were “not perceived as similarly lucrative.”
