There is no cryptocurrency bill. However, transfer gains are taxed at 30%. Furthermore, 1% TDS is applied at the time of transfer. For crypto-assets and exchanges, the party appears to be over. The announcement of digital rupees is more formal. RBI did not prepare or test its model. There is no mention of enabling legislation.
The highest tax band in India is 30% on digital assets and cryptocurrencies
Today, Finance Minister Nirmala Sitharaman announced that income from digital assets will be taxed at 30%, the highest tax bracket in the country. Instead of outright banning cryptocurrencies, the Modi government is drafting legislation to govern their use.
Losses from transactions in virtual digital assets, according to the Finance Minister, cannot be offset against other income. According to industry estimates, there are 15 million to 20 million cryptocurrency investors in India, with total crypto holdings of around 40,000 crores ($5.29 billion).
"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," Ms Sitharaman said.
Furthermore, the recipient would be taxed if he or she received crypto tokens or virtual assets as a gift. According to FM, a 1% TDS will be levied on any payment made for a transfer that exceeds a certain monetary threshold.
Clarity on cryptocurrency taxation has been a long-standing demand of players in the crypto industry. Ahead of the Budget, the majority of exchanges have demanded clarity on the taxation of income earned from crypto assets, as well as GST rules implemented on trading platforms to make operations easier for all parties involved.
Because the government does not encourage cryptocurrency trading, a tax rate was expected. The industry expected it to be treated similarly to the lottery, game show, and puzzle winnings.
The government is leaning toward recognising cryptocurrencies as a financial asset; while users will not be able to make payments with them, they can be held in the same way that shares or gold are.
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