The Indian government has finally answered a long-standing doubt of the Indian crypto community regarding crypto taxation norms in yesterday’s Budget speech. The new norms will come into play from the 2022-2023 Financial year.
The country’s Finance Minister Nirmala Sitharaman officially announced that any profit or income from digital assets would levy a tax of 30%. Plus, she further added that even the profit from the transfer of any digital assets would also levy the same tax rate of 30% and in case of airdrops or gifts, the recipient will be held accountable for paying the tax. Further, a TDS of 1% would be levied on all payment based transactions made via digital assets to help keep a record of all such digital asset-based payment transactions.
The Finance Minister also added that no tax deductions would be applicable on the taxation levied on the profits from digital assets and further losses caused by any kind of digital asset transfer mishap could not be set off against any other income as deductions.
“Accordingly, for the taxation of virtual digital assets, I propose to provide that any income from transfer of any virtual digital asset shall be taxed at the rate of 30 per cent,” the Finance Minister said. Sitharaman further said that no deduction in respect of any expenditure or allowance shall be allowed while computing such income except cost of acquisition. The loss from transfer of virtual digital asset cannot be set off against any other income.Indian Finance Minister Nirmala Sithraman
The Finance Minister also mentioned that the RBI is also set to launch its own CBDC, the digital Indian Rupee in 2023 which will also come under the same taxation laws as mentioned above.
Does this mean crypto has been accepted legally?
You may think by this new taxation development that the answer may be simply yes. But, to everyone’s surprise, the Finance Minister later clarified on being asked the same question that the government hasn’t made any official decision regarding crypto being regulated other than the taxation norms or accepted as an asset class in India or not. Hence, we have to wait for further developments.
However, crypto experts believe that due to the above new development the chances of it being banned is completely off the table and there is a high possibility that it will be accepted as an asset class soon.
How does the Indian Crypto Community view this new development?
Well, this new development has caused the Indian crypto community to segregate into two groups. One of the groups which mostly includes the exchanges and the large institutions is taking this news positively as they view this step as the very first baby steps for the major crypto regulation to come and the second group, mostly comprised of the normal public are discussing the adverse effects of such high taxation which is mostly unbearable and they believe that the government is purposely trying to cripple the growth of the crypto market by imposing such high taxes.
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