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India Legalises Cryptocurrency, Proposes 30% Tax on Crypto Income

The Indian government has proposed taxing income from cryptocurrencies and other digital assets at 30%. India’s finance minister, Nirmala Sitharaman, said: “There’s been a phenomenal increase in a transaction in virtual digital assets … The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime.”

Indian Finance Minister Nirmala Sitharaman proposed taxing income from cryptocurrencies and other digital assets at 30% while presenting the federal budget Tuesday. She said:

I propose to provide that any income from the transfer of any virtual digital asset shall be taxed at the rate of 30%. No deduction in respect of any expenditure or allowance shall be allowed while computing such income, except the cost of acquisition.

“There’s been a phenomenal increase in transactions in virtual digital assets,” the finance minister added. “The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime.”

The tax proposal puts cryptocurrencies and non-fungible tokens (NFTs) in India’s highest tax band.

Harish Prasad, head of banking, India, FIS, was quoted as saying: “This has been a much-awaited announcement in the context of the interest and growth in investments into these assets. The uncertainty and concerns on the legal, regulatory and tax status of cryptocurrencies are addressed to a reasonable extent by virtue of this announcement.”

Avinash Shekhar, the CEO of crypto exchange Zebpay, commented:

Thirty per cent tax on income from virtual digital assets, while high, is a positive step as it legitimizes crypto and hints at an optimistic sentiment towards further acceptance of crypto and NFTs.

Nischal Shetty, the CEO of crypto exchange Wazirx, commented: “We also hope this development removes any ambiguity for banks and they can provide financial services to the crypto industry.”

However, tax consultants warned that individuals could end up paying more than 30% of their crypto profits in tax and other charges. Amit Maheshwari, the partner at tax consulting firm AKM Global, told Reuters: “If you made a profit of 100 rupees then including the 30% tax bracket, plus surcharge and cess the total tax outgo will be around 42 rupees.”

Another announcement the Indian finance minister made Tuesday was about the launch of the country’s central bank digital currency (CBDC), the digital rupee. She said the central bank, the Reserve Bank of India (RBI), will introduce a digital currency starting in the financial year 2022-23, stating:

The introduction of a central bank digital currency will give a big boost to the digital economy. Digital currency will also lead to a more efficient and cheaper currency management system.

Bitcoin.com

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