BUDGET 2022: How Union Budget 2022 Settles Uncertainty Over Future of Cryptocurrency in India

When Union Finance Minister Nirmala Sitharaman revealed in her Budget speech on Tuesday that the Reserve Bank of India (RBI) will introduce its digital currency in the year beginning April 1, she dispelled questions and removed uncertainty about the future of cryptocurrencies in India.

The income generated by the transfer of all virtual assets will be taxed at a rate of 30%. Thousands of crypto investors who were concerned about the future of digital currency in India have been spared as a result of this.

India is the latest country to introduce its own blockchain currency, joining a select group of countries. This has far-reaching ramifications for the financial sector as a whole, highlighting India’s leadership in digital finance. Even the US has yet to build its own CBC.

The CBC implies taking advantage of blockchain’s advantages, such as cheaper operating costs and speedier settlements, right away. To fully comprehend all consequences, we must wait for all details.

Virtual assets, on the other hand, are now subject to unambiguous taxes. So, at the very least, we know what to expect this year from tax filers. Individuals may have desired lower LTCG taxes and the ability to carry forward losses from investments or real estate. But it’s a beginning.

Many stakeholders, including investors and industry participants, were expecting the introduction of a tax policy framework in the Union Budget 2022, therefore the union government was eager to put crypto under the tax ambit.

Crypto is officially recognized, and investors will pay taxes on the income derived from the sale of digital assets, with a tax rate of 30%, equivalent to lottery and gambling wins.

There is currently no legislation governing virtual currency. Millions of Indians have already invested lakhs of rupees in the digital currency despite the uncertainty.

The number of transactions in virtual digital assets has skyrocketed in India. That is why the government developed a unique tax system.

The Finance Minister explained:

1) Except for the cost of purchase, no deduction in respect of any expenditure or allowance shall be permitted when computing such income. Furthermore, any loss incurred as a result of the transfer of a virtual digital asset cannot be offset against any other revenue.

2) The government suggested levying a 1% TDS on payments made in connection with the transfer of virtual digital assets above a certain monetary threshold.

3) It is also proposed that a gift of a virtual digital asset be taxed in the recipient’s hands.

The national government is also launching a digital rupee to make transactions more efficient, which will be implemented by the Reserve Bank of India to minimize people’s reliance on currency. India is now one step closer to being one of the few countries to enact digital currency rules, as well as to adopt blockchain technology and integrate it into the economy.