Profits generated via crypto activities in India are subjected to a 30 percent tax deduction, a rule that most members of the Indian crypto community have been failing to comply with. In order to get more Indian crypto investors to pay their taxes, TaxNodes has decided to offer complimentary NFTs to taxpayers using its platform. The tax computation platform has partnered with Polygon Labs to offer these non-fungible tokens as incentives for crypto taxpayers.
The move is intended to further the adoption of digital assets in India, where the crypto community is expected to swell to over 156 million users by the end of 2023.
“Eligible users can claim their NFTs till July 31, which are minted on the Polygon Labs blockchain, by providing their ITR acknowledgement number. As an added incentive, they will receive an immediate 25 percent discount on their ITR filing for the year 2022-2023 through the TaxNodes platform,” the company said in an official release on Tuesday, July 18.
In the absence of a set rulebook for crypto, India levied taxes on crypto profits last April hoping to be able to maintain some track record of crypto transactions, most of which are largely anonymous.
The aim was to identify potential defaulters and suspicious crypto holders, who could be engaging in unlawful activities like money laundering or terror financing.
India's decision to levy a 30 percent tax on crypto incomes along with one percent TDS on each crypto transaction was met with mixed reactions from India's crypto community. While levying taxes made crypto an official part of India's financial ecosystem, the tax bracket was criticised for being too wide. Several disappointed and confused crypto holders in India failed to file their crypto taxes last year.
A recent report by Divly, a Sweden-based tech research firm said that only 0.07 percent crypto holders in India paid their taxes last year.
It is only a matter of time before we know for sure if gifting NFTs as an incentive for paying crypto taxes could get more people to declare their holdings.
“We not only want to thank users for putting their trust in us for their IT computation, we also want to encourage them to be a part of the larger Web3 ecosystem by bringing in the NFT element on the Polygon blockchain. They will witness first hand, the value of this NFT and how to use them to avail many benefits and discounts on our platform,” said Avinash Shekhar, CEO and Founder, TaxNodes.
The company has already tied up with India's ZebPay and WazirX crypto exchanges to help their users compute their respective crypto taxes.
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