The Union Finance Minister, Nirmala Sitharaman has proposed a 30 percent tax on all earnings from cryptocurrencies in India. This covers cryptocurrency exchanges as well as trades using NFT or non-fungible token. The Finance Minister made the announcement during her budget 2022 speech which has brought respite to many as this comes as sort of an official recognition of cryptocurrencies in the country. However, on the flip side, the tax is going to be levied even if you have incurred losses. The ruling will come into effect starting April 1, 2023 for the assessment year 2023-2024.
The Finance Minister also said the government is considering the formulation of a new draft of the crypto bill soon which will act to keep a tab on all transactions made using digital currencies. All of this should boost the confidence of global investors as well as exchanges and spur them to expand their operations in India which now boasts of more than 15 million cryptocurrency owners already.
That is not all as the government’s move should also act as an impetus to the companies engaged in developing metaverse products to set up base in India and make the most of the millions of developers active in the country. There has earlier been fears of the government imposing a blanket ban on cryptocurrencies and halt all trading using the same. The introduction of the taxes has made cryptocurrencies legal in India even if that is enough to make potential investors wary of investing in the segment.
Apart from a 30 percent tax on the earnings, there is also going to be a 1 percent Tax Deducted at Source that would apply to all transactions using cryptocurrencies or other digital assets. This applicable when the aggregating transaction is more than Rs. 10,000 per every payer though that amount stands at Rs. 50,000 is some cases.