The Indian government has proposed a 30% tax return on cryptocurrencies and other digital assets. India’s finance minister, Nirmala Sitharaman, said: “There has been a phenomenal increase in transactions in virtual digital assets … The size and frequency of these transactions has made it necessary to provide a specific tax regime.”
30% on Crypto Income
Indian Finance Minister Nirmala Sitharaman has proposed a tax revenue of cryptocurrencies and other digital assets at 30% by presenting the federal budget on Tuesday. She said:
I propose to provide that all proceeds from the delivery of any virtual digital asset be taxed at the rate of 30%. No deduction in respect of any expense or subsidy is permitted in computing such income other than the cost of acquisition.
“There has been a phenomenal increase in transaction in virtual digital assets,” the finance minister added. “The size and frequency of these transactions made it necessary to provide a specific tax regime.”
The tax proposal puts cryptocurrencies and non-refundable tokens (NFTs) in India’s highest tax rate.
Harish Prasad, head of banking, India, FIS, was quoted as saying: “This was a much-anticipated announcement in the context of interest and growth in investment in these assets. The uncertainty and concerns about the legal, regulatory and tax status of cryptocurrencies are being treated to a reasonable extent because of this announcement. “
Avinash Shekhar, the CEO of cryptocurrency exchange Zebpay, commented:
A thirty percent tax on income from virtual digital assets, although high, is a positive step because it legitimizes crypto and suggests an optimistic sense toward further acceptance of crypto and NFTs.
Nischal Shetty, the CEO of crypto exchange Wazirx, commented: “We also hope that this development will remove any ambiguity for banks and they can provide financial services to the crypto industry.”
However, tax advisors warned that individuals could end up paying more than 30% of their crypto profits in taxes and other charges. Amit Maheshwari, a partner at tax consulting firm AKM Global, told Reuters: “If you made a profit of 100 rupees, then including the 30% tax category, plus surcharge and cessation, the total tax expense will be around 42 rupees.”
Another announcement made by the Indian finance minister on Tuesday was about the launch of the digital currency of the central bank (CBDC), the digital rupee. She said the central bank, the Reserve Bank of India (RBI), will introduce digital currency from the financial year 2022-23, stating:
The introduction of a central bank digital currency will give a major boost to the digital economy. Digital currency will also lead to a more efficient and cheaper currency management system.
What do you think of India’s proposed cryptocurrency? Let us know in the comments section below.
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