Finance Minister Nirmala Sitharaman rolls out Union Budget 2022, crypto investors to pay heavy taxes on income.
- FM Sitharaman makes big announcements for cryptocurrency investors.
- Investors to pay heavy taxes on income, no set off in case of losses.
- RBI to introduce its own digital currency in FY23.
- PM Modi calls the budget progressive and people-friendly.
India’s Union Budget for the FY 2022 was greeted with mixed feedback from the citizens of the nation. Finance Minister Nirmala Sitharaman announced the financial road map of the country earlier today with 9.27 percent growth prediction of the national economy in 2022.
While some sectors welcomed the budget with open arms, it was particularly one industry that had a hard time processing the law- cryptocurrency. On one hand, investors celebrated the Union Budget for acknowledging crypto industry in the end. Digital currency finally made it to the financial books of the country. However, the government also made clear that it is still not ready to befriend the trend.
“There has been a phenomenal increase in transactions in virtual digital assets. The magnitude and frequency of these transactions are made it imperative to provide for a specified tax regime accordingly, for the taxation of virtual digital assets, I propose to provide that any income from transfer of any virtual digital asset shall be taxed at the rate of 30 percent,” said FM Niramala Sitharaman while presenting the Union Budget 2022-23.
Indian Finance Ministry and Cryptocurrency — Turf Continues
FM Nirmala Sitharam announced that government would levy 30 percent tax on the income generated through trading and transfer of virtual digital assets. Worse, losses made out of same would not be eligible for set off for income tax.
The mention of cryptocurrency at the end in the Union Budget 2022 is a leap ahead for crypto investors. However, one cannot deny the harsh blow of taxes that come with it.
Here are the major takeaways from the day that highlight why cryptocurrency investors and stakeholders are having a hard time with the Union Budget 2022 —
- Government to levy 30 percent tax on the income generated through transfer of virtual digital assets.
- Additional 1 percent tax deduction on source on the payments made through transfer of virtual digital assets.
- Losses against such assets will not be subjected to set off for income tax evaluation.
- No clarity on the prospects for the crypto exchange like WazirX, CoinDCX and others.
- The Reserve Bank of India will launch its own digital currency by next year.
No deduction in respect of any expenditure or elements shall be allowed while computing such income except the cost of acquisition for loss from the transfer of virtual digital assets cannot be set off against any other income — she added.
RBI To Launch Digital Currency
One of the major highlights of the Union Budget 2022 was the announcement of government’s own digital currency that will soon compete with crypto. FM Sitharaman announced that the Reserve Bank of India will soon be releasing its own digital currency, hopefully by the next year. She stated that the efforts in the same direction are already in action for months.
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.Sitharaman said…
So what is the RBI’s cryptocurrency gonna be like? The Central Bank Digital Currency or CBDC is most likely going to be the digital currency version of India’s fiat currency built on blockchain technology. People can expect CBDC to roll out in the financial year 2023.
Prime Minister Narendra Modi praised the budge calling it “people-friendly” and “progressive”.
This Budget brings more infrastructure, more investment, more growth and more jobs, — he said.
Before You Go: Nithin Kamath has simplified the entire scenario in his tweet:
The good news for crypto is that it was finally acknowledged in the budget. That doesn't mean it's legal—it will only be after the crypto bill.— Nithin Kamath (@Nithin0dha) February 1, 2022
Until then, regulated entities in India can't offer trading in crypto. Here's my reading of crypto post the budget 1/5