Budget 2022: 30% Tax For Digital Assets, Highest Tax Band In India

Though the government has yet to announce whether and how cryptocurrencies would be permitted, insiders have long claimed that they would be treated as digital assets. According to Finance Minister Nirmala Sitharaman, who presented the Budget today, income from digital assets would be taxable at 30%, the highest tax bracket in the country.

Instead of outright banning cryptocurrencies, the Modi government is working on legislation to restrict their use.

The Finance Minister stated that losses from virtual digital asset trades can not be adjusted against other sources of income. The giver will be responsible for the tax on cryptocurrency delivered as a gift.

“I propose to provide that any income from the transfer of any virtual digital asset shall be taxed at the rate of 30 percent. No deduction in respect of any expenditure or allowance shall be allowed while computing such income, except the cost of acquisition,” the minister said.

The government is considering permitting cryptocurrencies to be used as financial assets; while users will not be allowed to make payments with them, they can be held in the same way that stocks and gold are.

According to industry estimates, India has 15 million to 20 million cryptocurrency investors, with total crypto assets of roughly 40,000 crore ($5.29 billion).

The Reserve Bank of India has expressed “severe worries” about private cryptocurrencies, claiming that they could cause financial instability. The RBI will create a digital rupee backed by blockchain technology this year, according to the Finance Minister.

According to industry estimates, India has 15 million to 20 million cryptocurrency investors, with total crypto assets of roughly 40,000 crore ($5.29 billion).

The Reserve Bank of India has expressed “severe worries” about private cryptocurrencies, claiming that they could cause financial turmoil. The RBI will create a digital rupee backed by blockchain technology this year, according to the Finance Minister.

The 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,” Ms Sitharaman said.