The Finance Ministry of India has revealed new plans for crypto assets after the country’s central bank RBI withdrew its proposed plan to ban private cryptocurrencies from the winter session of the Indian Parliament.
Finance Minister Nirmala Sitharaman announced Tuesday that the country plans to levy a 30% tax on cryptocurrencies and NFTs-related income, without any exemption, deduction, or redemption.
“There has been a phenomenal increase in transaction in virtual digital assets. The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime,” said Sitharaman during the 2022 budget session speech. She added:
“No deduction in respect of any expenditure or allowance shall be allowed while computing such income except cost of acquisition.”
Prior to this, taxes levied during cryptocurrency transactions fell under ‘business income’ or ‘capital gains’, and were dependent on the nature of the transactions and tenure. The 30% tax slab is currently the highest tax band in the country.
Clarity on crypto tax as well!
Income from transfer of any digital asset to be taxed at 30%
No expenditure deduction except cost of acquisition
Loss from digital asset cannot be setoff
Yet another step towards positive crypto regulations 🚀🚀🚀#IndiaWantsCrypto
— Nischal (WazirX) ⚡️ (@NischalShetty) February 1, 2022
In addition, the RBI will also move forward with plans to launch digital Rupee, a central bank digital currency backed by Indian Rupee, by next year. This is the first time the Indian government has unveiled its plans to develop and issue a CBDC.
“Introduction of a central bank digital currency will give a big boost to digital economy. Digital currency will also lead to a more efficient and cheaper currency management system,” the finance minister noted.