Budget 2022: Crypto tax clarifies things, but not everyone is pleased.
According to some analysts, the 30% tax rate would simply raise the financial burden on cryptocurrency investors, who’ll have to pay a third of their profits in taxes.
The government’s planned taxation of digital assets has been hailed by cryptocurrency exchanges as a significant step toward recognizing cryptocurrencies as an emergent asset class. However, not everyone is pleased with the move, with some claiming that the 30% slab was too high. Finance Minister Nirmala Sitharaman announced on Tuesday that virtual digital assets, including cryptocurrency and non-fungible tokens, will be taxed (NFTs). In 2022-23, the government plans to launch a central bank digital currency, commonly known as CBDCs, that will be supported by blockchain technology.
“The most significant advance today was the clarification of crypto taxes.” This would provide much-needed credibility to India’s crypto sector. We also hope that this outcome clears the air for banks, allowing them to provide financial services to the crypto business. Overall, it’s excellent news for us, and we’ll need to read the entire version of the budget to grasp the finer points, ” said Nischal Shetty, the founder, and CEO of the Indian cryptocurrency exchange WazirX.
Sumit Gupta, co-founder and CEO of CoinDCX, said in a statement that the taxing decision gives the sector “much-needed confidence,” and that “taxation of virtual digital assets or crypto is a step in the right path.”
“It’s heartening to see the government taking a step forward in regulating digital assets. In a statement, Melbin Thomas, co-founder of Sahicoin, said, “This will change a lot of misunderstandings about crypto assets and pave the path ahead to recognizing them as a separate asset class.”
The profits earned from trading or investing in cryptocurrencies or other digital assets such as NFTs will be subject to a 30% tax. According to the notice, any losses incurred as a result of the transfer of a virtual digital asset cannot be offset against any other revenue. The government has also suggested levying TDS on payments made in connection with the transfer of virtual digital assets at a rate of 1% of the amount paid over a certain monetary threshold. Furthermore, every gift of a virtual digital asset is suggested to be taxed in the recipient’s hands.
The creation of CBDC, according to CoinDXC’s Gupta, is a “clear indicator of India being a digital-first, efficiency-driven, and transparency-led system.” “CBDC with the backbone of Blockchain” will help India “establish a prominent position in the global economy,” he added.