The festival for crypto fans is finally coming to an end in India. India on Tuesday proposed the launching of the digital Rupee by next year. It also proposes a 30% income tax on earnings from the transfer of virtual digital assets such as cryptocurrencies and NFT’s. This means crypto is officially legal in India!
It was one of the most tech-savvy and business-focused union budgets.
As a result, India finally moves towards bringing the uncontrolled and unfettered cryptocurrency sector under a regulatory framework. The nation’s Finance Minister Nirmala Sitharaman also suggested a 1% tax deduction at source on payments made related to the purchase of virtual assets.
Gifting virtual assets also will be taxed
The FM further added that no deduction regarding any expenditure or allowance should be allowed while computing such income except the acquisition cost. Additionally, loss from the transfer of digital assets cannot be set off against any other income. Therefore, gifting virtual assets will be taxed at the hand of the recipient.
Despite a climate of ambiguity and uncertainty surrounding crypto assets and NFT’s, the latter is making deep inroads and affecting every economy. For example, Binance-owned WazirX said last month that yearly trading volume on its platform exceeded $43 billion in 2021, at a “1,735%” growth from 2020.
India announces new crypto regulations, crypto is officially legal in India! 🇮🇳
A 30% tax has been imposed on all income made from digital assets like crypto and NFTs.pic.twitter.com/vixwdaejzb
— Watcher.Guru (@WatcherGuru) February 1, 2022
No specific tax regime
The FM also added that the magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime.
The emergence of crypto assets has led to the spawning of startups looking to innovate in the sector. For example, Andreessen Horowitz made its maiden investment in India last year by backing cryptocurrency exchange CoinSwitch Kuber.
The FM also revealed that RBI would unveil its CBDC in the next financial year. The RBI has already conducted several controlled trials for several months in the country and has examined its impact on the banking and monetary systems.