Cryptos now legal in India ahead of digital rupee launch
- India announced plans to launch a digital currency by 2023 as the country moves closer to recognizing cryptocurrencies as legal tender.
- Finance Minister Nirmala Sitharaman proposed a 1% tax deduction at source on payments related to the purchase of virtual assets.
- Income from the transfer of cryptocurrencies and virtual assets, including gifts, would be taxed at 30%.
Cryptocurrencies are now legal in India as regulators prepare to tax crypto purchases and transactions. India is on track to launch its digital currency next year.
India welcomes crypto, imposes 30% tax on gains from virtual assets
Earlier today, India announced plans to launch a digital currency by next year. The country has prepared taxation norms, moving closer to recognizing crypto as legal tender. India is considered the second largest internet market globally; crypto taxation is key to digital asset adoption.
Finance Minister Nirmala Sitharaman announced that income from the transfer of cryptocurrencies and virtual assets would be taxed at 30%. Details of all crypto transactions would be tracked at the source with a 1% deduction on the purchase of virtual assets.
Virtual assets received as gifts would be taxed at the recipient’s end. The Indian Finance Minister told Bloomberg that there had been a phenomenal increase in cryptocurrency transactions and the frequency made it imperative to implement a tax regime.
Sitharaman was quoted as saying:
No deduction in respect of any expenditure or allowance shall be allowed while computing such income except the cost of acquisition. Further, loss from transfer of digital asset cannot be set off against any other income.
Previously regulators in India debated a ban on cryptocurrency trading and a jail term of 10 years on violation.
The central bank, the Reserve Bank of India (RBI), is set to introduce a digital currency. Sitharaman said that the RBI had tested it's Central Bank Digital Currency (CBDC) through controlled trials for months now.
After testing CBDCs impact on the banking and monetary system, the RBI is ready to launch it within a year.
Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
