The Indian government has specified its taxation rule for cryptocurrencies, making it one of the least crypto-tax friendly countries in the world. It will impose 30 percent taxation on the transfer of virtual assets from the financial year 2022-2023, Nirmala Sitaraman, the Finance Minster, confirmed in her budget speech on Tuesday.
“Any income from virtual digital assets is taxable at 30 percent,” Sitaraman said in parliament.
Further, there will be no tax deductions and exemptions for digital currency incomes available to Indian taxpayers. Also, any gifts made in digital currencies will be taxed at the hands of the recipient.
To properly track all crypto transactions within the country, the government will also levy a 1 percent tax deductible at source (TDS) for all cryptocurrency transfers. However, it is not clear how all these rules will be implemented in non-exchange wallets.
Additionally, the Finance Minister confirmed that crypto holders cannot offset their losses from cryptocurrencies with the gains, which is allowed for stock investors.
“There will be no deduction with exception of the cost of acquisition . The TDS is applicable beyond a specified monetary threshold, and the gift of virtual currencies is taxable in the hands of the recipient,” she added.
Big CBDC Plans
Moreover, the budget speech revealed that the Reserve Bank of India (RBI) is going to introduce a central bank digital currency (CBDC) in the next financial year. However, details on the timeline of that project are yet to come out.
“Introduction of a central bank digital currency will give a big boost to the digital economy,” the Finance Minister said. “Digital currency will also lead to a more efficient and cheaper currency management system.”
Meanwhile, the Indian government has drafted a bill to regulate the booming crypto industry, possibly imposing a ban. But, the crypto bill was not listed on the parliamentary docket of the ongoing session that started on Monday.
