India's finance minister Nirmala Sitharaman has announced that income from the transfer of digital assets, like cryptocurrencies, will be taxed at 30%, and there will be no deductions and exemptions. It will mark the highest tax band in the country so far. While presenting the Budget, the Finance Minister said that any losses due to transactions in digital assets cannot be set off against other gains.
Moreover, if a person gifts cryptocurrencies to someone, the tax will not be incurred by the receiver. While the Narendra Modi-led government was initially planning to ban cryptos, it is now preparing legislation for regulating their use.
"I propose to provide that any income from transfer of any virtual digital asset shall be taxed at the rate of 30 per cent. No deduction in respect of any expenditure or allowance shall be allowed while computing such income, except the cost of acquisition," the minister said.
RBI to Introduce New Digital Rupee
So, cryptocurrency is now legal in India and the Indian government is planning to introduce a new digital currency, which will be issued by the Reserve Bank of India (RBI).
"Introduction of a Central Bank digital currency will give a big boost to digital economy. Digital currency will also lead to a more efficient and cheaper currency management system. It is therefore proposed to introduce a digital rupee using blockchain and other technologies to be issued by the Reserve Bank of India starting 2022 and 2023," the finance minister said.
What do crypto analysts and traders think about the 30% tax?
Many traders and crypto analysts think that the Indian government's decision to legalise and regulate cryptocurrency is a win-win situation. for traders and the government as well. Crypto influencer, Lark Davis tweeted, "India just released a comprehensive tax plan for #crypto! The big headline is a 30% tax on crypto and #nfts, ouch. BUT!!!! It also means India is not banning crypto!!!! They just want to tax and regulate. This is VERY good news!
"Very happy to see that cryptos will be charged at a flat 30% tax. Its a win win situation! Investors should now not worry about whether investing in cryptos is legal or illegal. Good point for the Government is that they will get an opportunity to increase their tax collection," another Twitter user wrote.