The LUNA 2.0 tokens obtained through the airdrop would be subject to a 30% tax in India. In addition, Indian crypto investors will be unable to offset losses with profits due to the country’s tax laws.
The country’s crypto sector is heavily taxed, which means that all funds received, whether voluntarily or not, are subject to taxation. Many Indian crypto holders may end up paying a big tax bill due to the tax policy.
Many crypto holders are likely to actually sell the investment and be done with it, rather than dealing with its volatility and convoluted tax accounting.
India’s new tax regulations took effect on April 1 and sparked a frenzy of activity among investors, who are among the world’s keenest users of Bitcoin. In terms of overall development, the exchange CoinSwitchKuber launched the first rupee-based index for the crypto market, signaling some progress.
In addition, India is considering imposing a reverse charge tax on overseas cryptocurrency exchanges. This might drive even more business out of the country, which is already seeing a significant drop in trading volumes.
LUNA 2.0 having trouble gaining traction
The LUNA 2.0 token was airdropped to holders of the original LUNA token in an attempt to restore the Terra ecosystem following its massive crash. The token has been failing to gain traction, having dropped by more than 65 percent from its all-time high of $11.33.
In May, the trade volume for LUNA 2.0 topped $2 billion, but it remains to be seen how the project will do given the controversies surrounding it.
The new network is also rumored to be considering creating a new stablecoin, which may irritate regulators.
Terra’s operations are the subject of various investigations. Terra is facing a slew of lawsuits, which will hinder its efforts to resurrect. Following the Terra incident, South Korean authorities have increased their efforts to regulate cryptocurrency.