The government has not yet confirmed whether or how to allow cryptocurrencies, but sources have long stated that cryptocurrencies are treated as digital asset. Finance Minister Nirmala Sisaraman presented a budget today, stating that revenues from digital assets will be taxed at 30%, the highest tax band in the country.
The Modi government, which initially planned to ban cryptocurrencies, is instead preparing a law regulating the use of cryptocurrencies.
Losses from virtual digital asset transactions cannot be offset against other income, the Finance Minister said. For cryptocurrencies given as gifts, the tax will be incurred by the giver.
“I propose to provide that any income from transfer of any virtual digital asset shall be taxed at the rate of 30 per cent. No deduction in respect of any expenditure or allowance shall be allowed while computing such income, except the cost of acquisition,” the minister said
The government is leaning towards allowing cryptocurrencies to be used as financial assets. Users cannot make payments, but can store in stocks or gold.
Industry estimates indicate that India has an estimated 15-20 million crypto investors, with a total of approximately 40,000 chlores ($ 5.29 billion) of crypto investors.
The RBI raises “serious concerns” about private cryptocurrencies as it can lead to financial instability. Finance Minister today announced that RBI will announce a digital rupee backed by blockchain technology this year.
“The introduction of central bank digital currency will be a huge boost to the digital economy. Digital currency will also lead to more efficient and cheaper money management systems,” said Sitharaman.
