INDIA: On Tuesday, February 1, while presenting the union budget, India’s Finance Minister Nirmala Sitharaman announced a 30% tax on income from digital assets like Bitcoin and Cardano. There will also be a tax on a transfer of cryptos in form of gifts or from one wallet to another.
The Reserve Bank of India (RBI) will launch its digital currency based on blockchain technology in the next financial year. While presenting the Union Budget, for the fourth time Sitharaman said, “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 & cheaper currency management system,” she proclaimed.
Furthermore, the finance minister specified that no deductions and exemptions will be allowed. The gifts will be taxed on the hands of the recipient and 1% tax will be deducted at source (TDS) on the payments made for the transfer of digital assets.
“More importantly, losses during the transactions of digital assets cannot be offset against other income,” she stated.
There were avidities among the investors about the government’s stance towards the cryptocurrency world, but the decision of the government to impose the tax on the income from digital assets eventually sort of legalizes the cryptos in India. According to experts, investors can expect much more in the future, from the government.
What is Cryptocurrency?
A cryptocurrency is a digital currency that is monitored by a peer-to-peer network called a blockchain, which also serves as a secure ledger or record of transactions. Crypto exists digitally or virtually only.
According to reports, there are 15 to 20 million crypto investors in India, with total crypto holdings of nearly $5.37 billion (Rs 40,000 crore). According to an October report from an industry research firm, Chainalysis, the Indian crypto market grew 641% in the year through June 2021. Besides, India’s central bank had raised “serious concerns” about cryptocurrencies beforehand.
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