On June 5, as per the Bloomberg report, the collapse of Terra’s algorithmic stablecoin, USTC, has caused a major impact in the global cryptocurrency market. During the latest crash, its investors lost billions of dollars. However, in order to compensate holders. On 28 May2022, Do Kwon issued an airdrop of new tokens. Meanwhile, Indian investors may face a 30% tax on their terra holdings.
The Indian crypto community may be penalised under the new tax framework after suffering a significant loss in Terra Classic (LUNC) and Terra Classic USD. According to a recent report of Bloomberg, the Indian government can tax the number of Terra LUNA 2.0 tokens obtained through the airdrop by 30%. However, holders will not be able to offset any gains in the new token with losses from the old token.
The Indian Finance Minister stated in the current budget that a 20% tax will be applied on crypto earnings beginning April 1, 2022. This includes tax deducted at the source (TDS) on all transactions. However, it is unclear whether airdrops will be included. According to Manhar Garegrat, CoS of CoinDCX, such distribution might be deemed income. As a result, it may be taxed.
According to the newspaper, Jay Sayta, a tech lawyer, stated that the language used in the statute is ambiguous. There is little agreement on the concept of virtual digital assets and their transfer. The tax agency investigates every potential method of collecting taxes.
WazirX Vice President Rajagopal Menon revealed some information on Terra LUNA holders in India. On May 9, over 160,000 people had the token, according to statistics. However, by May 15, it had increased by 77 percent. Meanwhile, it is unknown how many of the holders owned TerraUSD. The largest volumes in LUNA were reported on May 11 and 12.
According to the study, analysts believe that the new tax regime would include two phases of taxing. The valuation of tokens received in the airdrop will be subject to a gift tax or a flat 30% tax. If the tokens are sold at a greater price in the second stage, a flat 30% tax will be charged.
