India’s Finance Minister (FM) Nirmala Sitharaman presented the annual budget for 2022 with some key provisions surrounding the launch of the CBDC (Central Bank Digital Currency) and crypto taxations.
“There has been a phenomenal increase in transactions in virtual digital assets. The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime,” said the FM in her critical budget speech. Nearly 15 to 20 million Indians invest in crypto assets totaling $6 billion (₹40,000 crores) in investments, as per current industry estimates.
Highlights from the Finance Bill in relation to Crypto Taxation:
- 30% tax on any income from the transfer of virtual digital assets
- No deduction in respect of any expenditure or allowance shall be allowed while computing such income, except the cost of acquisition
- Losses from transactions in virtual digital assets cannot be offset against other income
- Additionally, 1% TDS (Tax Deduction at Source) will be charged on payments made relating to virtual digital assets above a certain threshold
- Gifts in virtual digital assets will also be taxed in the hands of the recipient
Highlights of the Finance Bill regarding CBDC:
- The Reserve Bank of India (RBI) will introduce a blockchain-based “digital rupee” or CBDC by 2023
“Introduction of a central bank digital currency will give a big boost to the digital economy. Digital currency will also lead to a more efficient and cheaper currency management system,” the Finance Minister said. RBI had earlier indicated that a pilot CBDC project would be launched in 2022–23.
Industry leaders believe that the FM’s budget proposals will cater well to the industry by legitimizing crypto as a legally recognized financial asset class.
CoinSwitch welcomes the government’s move to introduce a digital rupee. “The regulatory guidance on tax from the government furthers the mainstreaming excitement of this emerging asset class with over $6 bn worth of investments in India. It is also the gateway to the future decentralized world,” tweeted Ashish Singal, CEO and co-founder of CoinSwitch Kuber.
Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.
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