Bitcoin is legal in India or not, the Supreme Court has asked the central government to clarify its stance on cryptocurrencies. The central government is preparing a bill to regulate cryptocurrency and other digital assets in India. Finance Minister Nirmala Sitharaman announced in the Union Budget 2022 that the central government will levy a hefty 30 percent tax on virtual assets including cryptocurrencies and non-fungible tokens, or NFTs. For this crypto tax, Budget 2022 proposed introducing a new section of 115 BBH to levy income tax on cryptocurrencies and other virtual assets.
Is Cryptocurrency Legal in India?
Finance Minister Nirmala Sitharaman explained that taxing cryptocurrencies does not give them legal status in the country. It is the sovereign right of the state to tax cryptocurrency transactions. But the finance minister said that any official position on the regulations would only come after the end of the ongoing consultations.
Crypto tax: what does it mean?
Proposed Section 115BBH seeks to provide that where a resident’s gross income includes any income from the transfer of any virtual digital asset, then the income tax payable shall be the total amount of income tax calculated on the income from the transfer of any virtual digital asset at a rate of 30 percent and the amount of income tax that It would have been carried by the resident person had the total income of the resident been reduced by the total income from the transfer of virtual digital assets,” the 2022 budget note said.
The newly proposed cryptocurrency tax will be implemented from the 2023-24 assessment year. This means that all of your income from crypto transactions in the 2022-23 fiscal year will be taxed at the rate of 30 percent. Investors are required to pay taxes according to the current tax rules for the 2021-22 fiscal year.
What are virtual digital assets?
Explaining what would fall under virtual digital assets, Mickey Irons, DeSpace Protocol’s chief marketing officer, “In simple words, this basically means cryptocurrencies, DeFi (decentralized finance), and non-fungible tokens (NFTs). At first glance, this excludes gold. digital currency, central bank digital currency (CBDC), or other traditional digital asset, and thus aims to tax cryptocurrencies specifically.”
Crypto Legality in India: What the Experts Say
Since the central government immediately announced a 30 percent tax on any kind of transfers in digital currencies, investors are taking it as a positive first step towards regulating crypto in the country. It is now clear from the budget announcement that there will be no ban on cryptocurrencies and this may encourage more investors in the industry rather than deter them.”
However, more clarity should emerge, perhaps through circulars, on the method of taxing a single trading of cryptocurrencies as securities in a trade or exchange. There should also be clarity about the cost of acquisition as there may be commissions for the platform, gas fees, etc. that may factor into the cost of acquisition.”