Blockchain and Crypto Assets Council (BACC) in a statement said that it is of the view 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.”
Singhal added, “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.”
Sumit Gupta, Co-chair of BACC and Founder-CEO of CoinDCX in the statement 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. representing the interests of the crypto ecosystem in India.