In a big push for crypto adoption in India, the Indian government took a stand on cryptocurrencies and levied a 30% tax on income from digital assets. Although there is no formal acceptance from the government of digital assets in the country yet, “crypto tax” is a step that’s being welcomed by entrepreneurs, traders and enthusiasts alike.
Taxation On Digital Assets
In the first step towards crypto acceptance, and noting the rise of crypto transactions in the country, finance minister Nirmala Sitharaman said that the sheer magnitude of the transactions made it essential to provide for distinct taxation. While presenting the union budget, the government proposed a 30% crypto tax, proposing taxation on crypto gains. Additionally, 1% TDS (tax deduction at source) would be applicable on the sale of all digital assets.
Other than sales and transfer, digital assets gifted have also been proposed to be taxed.
India To Get A Blockchain-Powered Rupee
Besides a crypto tax, another major announcement in the budget was the new blockchain-powered digital rupee. The digital rupee aims to facilitate easy and efficient transactions, powered by blockchain technology. The blockchain-powered and RBI-backed Central Bank Digital Currency (CBDC) will be available by 2023.
The Road Ahead
Experts and investors were anticipating crypto inclusion in the budget, and the 2022 Indian budget hasn’t disappointed. With the inclusion and taxation of the digital asset class, it is clear that India is on the way to formally recognise cryptocurrencies, albeit with government regulations and recognitions.
Moreover, the RBI-backed digital currency is a huge step in blockchain adoption across government bodies. The digital rupee is seen as fueled by the growth of digital transactions, especially with the UPI implosion – especially post the beginning of the pandemic. While more details are awaited for more clarity on the new budget and taxation regime, this is a step towards the acceptance of digital assets and a great day for the entire industry.
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