Cryptocurrency: Government imposes tax on crypto gains

India steps closer to accepting cryptocurrencies

By Amit Srivastava

Finally, the government of India moved one step closer to accepting cryptocurrencies. The Reserve Bank of India will launch its own digital currency in the next financial year, said Finance Minister Nirmala Sitharaman in her budget speech on Tuesday.

After a roller-coaster journey, cryptocurrency has become legal in India with the announcement of a tax on income from the transfer of digital assets. Now, people can invest as the decision has removed any uncertainties about the legal status of digital transactions.

The decision also led Bitcoin to gain around 4.5% during the day. Even other currencies too saw a positive move.

During the budget speech, finance minister Sitharaman announced a 30 percent tax on any income or profit from the transfer of virtual assets. However, there will be no deductions or exemptions. Now, it can be concluded that cryptocurrencies and non-fungible tokens have been brought under the tax net.

In a statement Darshan Bathija, co-founder and chief executive officer of Vauld, a crypto exchange platform based in Singapore said, “Imposing a tax on any income from cryptocurrencies means the ban is out of the table now.”

Sitharaman accepted that there has been a phenomenal increase in transactions in virtual digital assets and the magnitude and frequency of these transactions forced to provide for a specific tax regime.

Even the crypto gifts will also be taxed in the hands of the recipient. In addition, there will also be a 1 percent tax deducted at source (TDS) on the payments made for the transfer of digital assets. At the same time, any loss made on the transaction of such digital assets cannot be set off against any other gain.

But the fat tax rate for gain on cryptocurrencies is also looked to discourage people from making investments, especially the retail investors. Industry expert believes that the intention could be to prevent people from speculation while investment in digital currency. But at the same time, a section of people believes that this is a positive step towards crypto regulations.