The world’s second-biggest nation announced the proposal of a 30% tax on crypto and NFT incomes as the country prepares to accept crypto as a legal tender.
Cryptocurrency adoption has increased in India over the past couple of years. The most popular crypto exchange in the country, Binance, saw the transaction value increase by $43 Billion in 2021. Moreover, the technology-centric county saw aggressive marketing of crypto start-ups which raised concerns in the regulatory sector.
Finance Minister, Nirmala Sitharaman, cleared the air around the future of crypto in India. She proposed a 30% tax on all the income earned via transfer of virtual assets including Crypto and NFTs. Moreover, 1% tax deduction at source on payments made related to purchase of virtual assets.
According to Ms. Sitharaman, the magnitude of crypto transactions in India makes it imperative for the government to provide a tax regime. She also announced the plans of bringing in Central Bank Backed Digital Currency (CBDC).
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,
Reaction to 30% Tax on Crypto
The news brought a mixed response from the crypto circles of the country. The individual investors saw it as a step by the government to take its cut from people’s own earnings.
— Aditya Singh (@CryptooAdy) February 1, 2022
On the other hand, institutions welcomed the move. Nischal Shetty, the CEO of Wazir X said in a statement that the proposal if implemented will bring clarity on crypto taxation in India.
This will add the much needed recognition to the crypto ecosystem of India. We also hope this development removes any ambiguity for banks, and they can provide financial services to the crypto industry. Overall, it’s good news for us, and we will need to go through the detailed version of the budget to understand the finer details,