Can India’s Controversial New Tax Law Be Challenged in Court? Yes, Say Crypto Lawyers

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Can India’s Controversial New Tax Law Be Challenged in Court? Yes, Say Crypto Lawyers
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As India's crypto community grapples with a controversial new tax law, crypto businesses and lawyers are exploring the plausibility of a legal challenge and they may just have a strategy. By amitoj

The crypto tax law enforces a 30% tax on profits from crypto transactions, effective April 1. Traders will not be able to set off losses from other crypto transactions. Crypto gifts within a family would be exempt, but gifts above Rs. 50,000 outside the family would be taxable once in the hands of recipients.

The Reserve Bank of India , the nation’s central bank, issued a circular that effectively prevented banks from providing services to crypto exchanges in 2018. The nation's Supreme Court struck down the RBI circular in March 2020, in a clear victory for the crypto community. “Approaching the courts might just be the only recourse … especially regarding TDS, more than the tax rate itself. The TDS rate and provision is arbitrary and will severely impact operations. On the TDS, I do believe there is a solid case to be made and that’s something we have looked at,” Rastogi said.

The provisions may be challenged for violating the fundamental right enshrined in the constitution of the Right To Trade or Article 19 which states that “All citizens shall have the right to practise any profession, or to carry on any occupation, trade or business,” he said. Rajat Mittal, a tax counsel in India's Supreme Court advising crypto businesses, said “the Supreme Court is unlikely to interfere in a challenge to imposition of the 30% tax since the government’s policy decisions are not subject to judicial review.”

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