TaxNodes aims to enable retail investors to automate crypto taxation by bringing all of their crypto transactions on one platform
TaxNodes will also provide solutions to crypto exchanges around crypto reconciliation and automation of crypto accounting and integration with traditional accounting systems
Shekhar began his journey with ZebPay when the crypto exchange and the industry itself was at a very nascent stage and stepped down from his position as the CEO last September
Avinash Shekhar, former CEO of crypto exchange ZebPay, on Thursday (January 12) announced the launch of his Web3 startup ‘TaxNodes’ to transform the way crypto profitability, taxation and reporting is handled for retail investors as well as exchanges.
TaxNodes aims to simplify the tax computing process and individual tax compliance. In addition, it aims to help crypto exchanges increase their internal controls and automate reconciliation and accounting.
The startup claimed that it will enable retail investors to automate crypto taxation by bringing all of their crypto transactions across multiple exchanges, P2P, private wallets and different blockchains on the same platform. To ensure the completeness of data and its integrity, TaxNodes will take count of real-time profit or loss computation, portfolio tracking, dashboards and analysis.
It also plans to offer tax planning and year-end tax reports through which users can file their returns.
On the other hand, TaxNodes will also address the challenges faced by crypto exchanges by providing solutions around crypto reconciliation, automation of crypto accounting, and integration with traditional accounting systems, the startup said in a statement.
Additionally, TaxNodes will also help government regulators increase their ability to ensure tax and other compliance from crypto users and exchanges by providing audit tools.
“While the crypto industry has witnessed rapid growth in India, investors have been feeling overwhelmed due to lack of clarity on the taxes levied on their investments. A majority of them are facing challenges while calculating taxes on their investments. TaxNodes aims to address these challenges by identifying and offering end-to-end solutions to pain-points through comprehensive auditing tools to all stakeholders in the crypto ecosystem,” Shekhar, founder and CEO of TaxNodes, said.
Shekhar stepped down from his position as the CEO of crypto exchange ZebPay last September. ZebPay was his first organisation in the domain of Web3 and the startup ecosystem.
Shekhar’s journey with ZebPay began when the crypto exchange and the industry itself was at a very nascent stage. He was a key member of ZebPay’s relaunch in 2020, and helped build the Indian business and team. He also holds experience in other industries such as telecom, retail and ecommerce.
Crypto Taxation In India
Finance Minister Nirmala Sitharaman on February 1, 2022, while presenting the Union Budget 2022-23, introduced crypto taxation rules – 30% tax on gains from VDA transactions, 1% TDS on VDA transactions above INR 10,000, and the provision disallowing the offsetting of losses.
The 30% tax rule became effective on April 1, 2022. As per the rules, loss from one asset can not be set off against gain from other assets. Later, the 1% TDS rule came into effect on July 1, 2022. While the crypto exchanges saw a huge impact on trading volume in April itself, the volume declined further in July after the TDS rule was implemented.
Following the announcement of a new tax regime, there was a shift of INR 32,000 Cr ($3,852 Mn) of crypto volume from domestic centralised VDA exchanges to foreign ones during February-October 2022, according to a report by think-tank Esya Centre.
Of this, cumulative volume of INR 25,300 Cr was offshored during April-September period of financial year 2022-23 (FY23).
Although there have been speculations on what would be crypto’s future in India, Rajeev Chandrasekhar, Union Minister of State (MoS) For Electronics and Information Technology, told Inc42 recently that there is nothing to prevent anyone in India from innovating in crypto or the Web3 space.
“If you are a startup, and you are innovating in crypto or blockchain or Web3, there is absolutely nothing in the law that prevents you from doing it,” he said.
While it remains to be seen if the crypto industry will get back on track in 2023 after a disastrous 2022, both regulators and investors seem to have faith in Web3 startups.