Bengaluru, February 1, 2022: With the announcement of Indian Crypto Budget 2022, India has taken a step further to adopting cryptocurrencies despite years of hesitating, as the country tries to stay up with the international trend toward virtual assets. Nirmala Sitharaman, the finance minister, released the budget for calendar year 2022-23 on Tuesday, with the goal of boosting growth in the face of continuous damage from Covid-19 as well as growing inflation. Spending on infrastructure received the most attention.
Following the government’s failure to introduce the much-anticipated cryptocurrency bill in the Union Budget 2022-23, Nirmala Sitharaman, the Union Finance Minister, announced that India will regulate bitcoin as well as crypto, rather than outright ban them, and will establish new tax restrictions in the 2022 budget.
India’s growing acceptance of virtual currency inspired the move, bringing the country one step forward in regulating these investments. India will therefore join a select group of countries that have launched their own blockchain currency. Read further to know the Indian crypto budget announcement 2022 in detail.
Big Announcements on Indian Crypto Budget
The Union Minister has made various announcements regarding the Indian Crypto Budget. Read further to know more. The decision comes even as the Indian government prepares to propose a cryptocurrency bill prohibiting “all private cryptocurrencies in India” with “limited exceptions made.”
The Union Finance Minister announced that any income derived as a result of the availability of online digital content would be taxed at 30%. It will have an influence on gains from cryptocurrencies as well as NFTs, both of which have enjoyed recent growth in India. She made the following suggestion:
“Any income derived from the any online virtual commodity transference is subject to a 30% tax.” Except for the cost of purchase, no deductions in regard in terms of any spending or allowance having been made for calculating such earnings.”
In her budget statement on Tuesday, FM Nirmala Sitharaman stated that the Reserve Bank of India would introduce its digital currency in April of this year. She stated that the implementation of a CBDC would give the digital industry a “huge boost” when discussing the introduction of a digital rupee. She also mentioned how digital currencies could provide a highly efficient as well as cost-effective money management mechanism.
According to her official statement which says that:
“It is therefore proposed that, beginning in 2022-23, the Reserve Bank of India issues a digital rupee based on blockchain and other technologies.”
The central bank digital currency (CBDC) is a digital form of fiat currency supported by blockchain as well as governed by the central bank. CBDC is distinct from decentralised virtual currencies including cryptocurrency assets, which would not be issued by the government and wouldn’t have the status of “legal tender.” It allows users to make domestic as well as cross-border transactions without the involvement of a third entity or a bank.
Any losses incurred while dealing digital assets, according to the finance minister, could not be used to offset any other source of income.In simple words, investors will be unable to use cryptocurrency losses or hacks to offset taxation on gains.
Sitharaman also recommended a 1% tax deduction at source (TDS) above a yet-to-be-determined threshold. In simple words, the government has additionally legislated for TDS on payments taken in regards to the transfer of virtual digital assets at a 1percentage of these kind of evaluation in excess of a financial threshold in order to maintain track of cryptocurrency investments in the nation. Giving an online virtual asset as a gift is also recommended to be taxed in the recipient’s hands.
Tapati Ghose, a partner at Deloitte India, said that the introduction of CBDCs as well as taxation guidelines for digital assets clarifies the position of cryptocurrencies in India.
Experts have characterised it as a risky move that may deter transactions. However, Nischal Shetty, the CEO of cryptocurrency exchange WazirX, stated that this announcement provides more clarification on crypto transactions. He went on to say that the cryptocurrency sector would hopefully shift away from the fear of cryptocurrency bans and toward taxation of virtual assets.
Indian Budget 2022-23: Taxes on Digital Currencies, 2022: What we know so far?
What is the percentage of tax you need to pay for gains on online assets?
30 percent
From when will the proposed tax plan be implemented?
April 1 2023 onwards
Is there STCG and LTCG tax on online assets?
No.
Can we offset losses on digital currencies of previous year with profits in the next year?
No, you can’t do that.
If my income is less than lowest income tax slab, do I still need to pay taxes on gains through selling digital assets?
Yes, you still need to pay 30 percent tax even if your income falls under lowest income tax slab.
Crypto Currency as Gifts: How will it be taxed?
It will be taxed in the hands of the recipient. Tax slab is 30 percent.
Video: India Introduces Taxes on Crypto Gains – Discussing the Implications
