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Budget 2022: Transaction Done In Crypto World Will Be Taxed At 30% | What It Means
Finance Minister Nirmala Sitharaman proposed a 30 per cent tax on income from transactions in the crypto world. This means gifts in crypto and digital assets will also be taxed.
Budget 2022: Finance Minister Nirmala Sitharaman on Tuesday made major announcements on the cryptocurrency world and other virtual assets during the Union Budget 2022 presentation. In a first, Nirmala Sitharaman proposed a 30 per cent tax on income from transactions in the crypto world. She had also announced that Reserve Bank of India (RBI) will introduce digital currency in the next financial year beginning April 2022 to boost the digital economy and efficient currency management.
Moments after presenting the Union Budget in Parliament, Nirmala Sitharaman held a press briefing and cleared the air on taxing profits made out of transactions on virtual assets or digital currency. “What RBI will issue is a digital currency. Everything that prevails outside of it is assets being created by individuals and we are taxing profits made out of transactions of those assets, at 30 per cent,” Nirmala Sitharaman said in the press briefing.
While emphasising on digital currency, Sitharaman said the government is also “tracking every trail” of digital money used for the transaction of crypto assets. “We are also tracking every trail of money in that (transaction of crypto assets) by imposing one per cent TDS at every transaction,” Sitharaman said.
#WATCH | FM Nirmala Sitharaman speaks on proposed Digital Rupee & cryptocurrencies: What RBI will issue is a digital currency. Everything that prevails outside of it is assets being created by individuals & we are taxing profits made out of transactions of those assets, at 30%. pic.twitter.com/acVOktqosH
— ANI (@ANI) February 1, 2022
Digital currency and assets like NFTs (non-fungible tokens) have gained traction globally over the last couple of years. Trading in these assets has increased manifold with cryptocurrency exchanges being launched. NFTs are unique digital assets with verified ownership rights and the details are stored on a blockchain. Till now, India did not a clear policy on either regulating or taxing such asset classes. This is the first time the government had laid down tax rules for cryto world.
Summary: This means gifts in crypto and digital assets will also be taxed. Also, to bring such assets under the tax net, a per cent TDS (tax deducted at source) was introduced on transactions in such asset classes above a certain threshold. The RBI will introduce a new digital rupee soon. However, the fate of Bitcoin and other crypto tokens remains unclear in India.
What Experts Said
Purushottam Anand, Founder, Crypto Legal said the government has cleared the “regulatory cloud around legality of cryptocurrencies in India”. “The Government has proposed a specific tax regime for Virtual Digital Assets (VDA) proposing to tax income from transfer of any VDA at 30%. This clears the regulatory cloud around legality of cryptocurrencies in India and will support innovation and growth of the industry. The budget has also cleared the way for the RBI to expedite and India’s own digital currency,” Purushottam Anand said, according to a report by ZeeNews.
Archit Gupta, Founder and CEO of Clear, said: “Government has brought in 30 per cent tax on cryptos income, where no deduction for any expenses except the cost of acquisition shall be allowed. The gift of virtual assets shall also be taxed for the recipient. This clears the air on taxes for cryptos, however, there are several types of incomes people earn from cryptos and hopefully, more clarity will be available in the Budget documents.”
“Creation of a blockchain-based central bank digital currency while bringing virtual digital assets under the tax net at the highest rate of 30 per cent will help reduce speculative play, especially in the cryptocurrency space,” Shravan Shetty, MD, Primus Partners- Digital Currency, was quoted as saying by news agency PTI.
The central currency will help bring the benefit of a digital currency to the economy in a structured framework, Shetty said.
Last year, the Centre had listed ‘The Cryptocurrency and Regulation of Official Digital Currency Bill‘ in the winter session of Parliament. It had then created a framework to create a facilitate framework for the creation of the official digital currency to be issued by the Reserve Bank of India (RBI).
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