A recent 30% tax on crypto earnings in India triggered a collapse in the amount traded around India and sparked concerns about similar impacts on the gambling sector.
According to cointelegraph, the trading volume on WazirX, the leading crypto exchange in India, declined from $47.8 million on April 1 to $13.2 million on April 17.
Many fear the government will replicate the same measures on ordinary bettors who land a profit and turn them back into the arms of illegal and dangerous betting operations. It would prove a regressive step by the government – particularly when taxation on gambling companies in markets such as the United Kingdom has proven far more effective than on individual players.
So what would a 30% tax mean for Indian bettors? Why has the Indian government enacted such a hardline policy on Crypto? How would the move negatively counteract the huge recent strides towards gambling regulation?
Read our take on the latest news below.
Is Crypto Tax An Ominous Sign For Bettors?
The simple question many gamblers may ask in an era of new regulations and the prospect of legalisation would be this: “Why play somewhere that would curtail any potential winnings?”
When you consider the alternative is illegal, dangerous, and underground bookmakers, one can see the issue gambling companies face. Rather than losing money to tax, players will be driven to risk money via unsafe means.
Any tax introduced would feel like a massive backward step to India’s gradual approach to regulating and legalising gambling.
It isn’t even as though government taxation windfall can’t come from another source. In the United Kingdom, all players benefit from a tax-free policy on any winnings. Instead, the government has imposed a 21% tax on all profits made by any betting company offering services in the UK.
Chief Editor of industry-leading website sevenjackpots.com Felicia Wijkander writes in this article that both Crypto and the prospective online gambling industry in India can learn from each other:
“Crypto regulation can be the stepping stone towards seeing proper gambling regulation similar to that of Sweden, the UK, Italy. No vague definitions of “skill” versus “chance,” just simple regulation that demands transparency, fairness, and care towards its gamblers.”
Why Does The Indian Government Impose A Tax On Crypto Earnings?
On top of the 30% tax on Crypto earnings, the government is also targeting traders through a 1%Tax Deductible at Source charge, which many professionals worry could choke liquidity in the country.
Recounting the new tax laws surrounding Crypto assets on March 25, Finance Minister Nirmala Sitharaman told the Lower House of Parliament that the rules would help the government track transactions rather than represent an additional levy. Still, critics argue it’s another illiberal draconian measure that doesn’t hit the correct targets.
Why Tax Could Negatively Impact Gambling Regulation
India is at a crossroads in what can still be a bright and exciting financial future, but governmental leaders are choosing the wrong targets. Suppose they were to regulate the best betting sites in India but apply a 30% levy on winnings. In that case, many customers may turn back to the dark markets to place their bets, negating the progressive safety benefits gambling regulation brings.
I hope governmental leaders pay close attention to what authorities on gambling regulation have to say before finalising any rules.
