Finance Minister Nirmala Sitharaman´s Union Budget for 2022 has proposed several steps for a more digital India, one of them entails a 30% tax on income from crypto and NFTs. The crypto community has welcomed this move as it legalises the status of crypto in India.
HIGHLIGHTS
- Introduction of digital Rupee by RBI starting 2022-23
- Income from digital asset transfers to be taxed at 30% giving it a legal status in India
The Tech Panda gathered the reactions, both positive and negative, of several experts to find out what the crypto community thinks of the new regulation.
Read more: Budget 2022 reaction: HEALTHCARE
Tarusha Mittal, COO & Co-founder, UniFarm
We would like to see the finer print to really understand the implications for asset classes- corporates and retail users. But this is at least a start
‘Digital currency seems to have finally caught the government’s attention. This signifies a good step, and it is a welcome step towards the sentiments regarding cryptocurrencies as there are considerably fewer chances of a ‘ban’ or ‘prohibition’ of it, which is untenable anyway.
“According to our Finance Minister, income from the transfer of digital assets is to be charged 30% tax, plus 1% tax on the transaction. So, we now at least know what the retail users can expect this year.
“At the same time, the tax bracket is a bit concerning as it is on the higher end and individuals might have wanted lower LTCG taxes and carry forward of losses similar to equity or housing.
“I believe the overall outcome will revolve around how the tax regime will be implemented. We would like to see the finer print to really understand the implications for asset classes- corporates and retail users.
“But this is at least a start. The introduction of digital rupee using blockchain technology will further help in reducing financial and physical efforts required for money management and increase the awareness around the technology.”
Harsh Bhuta, Partner, Bhuta Shah & Co LLP
The launch of the digital rupee, which is a digital form of fiat currency backed by blockchain is encouraging, but we will have to wait for the Crypto Bill to see the government’s stance on other private cryptocurrencies
“The launch of the digital rupee, which is a digital form of fiat currency backed by blockchain is encouraging, but we will have to wait for the Crypto Bill to see the government’s stance on other private cryptocurrencies.
“The Budget, on the other hand, has included a new plan for taxing virtual digital assets such as cryptocurrencies and NFTs. The proposed section 115BBH seeks to specify that where an assessee includes any income from the transfer of any virtual digital asset, the income tax shall be 30% after deducting the cost of the acquisition of such asset.
“No other deduction in respect of any expenditure or allowance or set-off of any loss shall be allowed while computing income from the transfer of such asset. Further, no set-off of any loss arising from the transfer of virtual digital assets shall be allowed against any income for the current year, and such loss shall not be allowed to be carried forward to subsequent assessment years.
“Further, TDS u/s 194S is provided at 1% on payment for the transfer of virtual digital assets to a resident > INR 50,000 with certain conditions.”
Edul Patel, CEO & Co-founder, Mudrex
It is undoubtedly a progressive step towards boosting crypto adoption in the coming years
“The Finance Minister, Nirmala Sitharaman, has suggested 30% taxation on crypto gains. The losses if any cannot be offset against other income. Additionally, the introduction of TDS on crypto transfers can now monitor the crypto transactions. On sale of digital assets, 1% TDS would be applicable.
“Besides taxation on digital assets, India will soon have its blockchain power digital rupee. The digital asset classification will consist of crypto, NFT, and the government issued currencies. It is undoubtedly a progressive step towards boosting crypto adoption in the coming years.”
Kumar Gaurav, Founder & CEO, Cashaa
Currently taxation imposed is a little on the higher side, but the industry which was already growing rapidly in the absence of regulation, will now thrive with the government’s clear support
“The industry was waiting for the government to recognise crypto technology and innovation. Today, it is the beginning of a revolution when the government has itself announced the launch of digital cryptocurrencies. We, as an industry, have taken a step ahead towards adoption of digital currencies. Yes, currently taxation imposed is a little on the higher side, but the industry which was already growing rapidly in the absence of regulation, will now thrive with the government’s clear support.”
Ajay Lakhotia, Founder, StockGro
This will reduce the cost of physical currency management and build accountability and traceability
“The government of India & the finance ministry has taken the exemplary initiative to launch digital currencies, making India truly digital. This will reduce the cost of physical currency management and build accountability and traceability. The much talked about 30% tax on income from digital assets, i.e. cryptocurrency resolves the sector’s regulatory overhang to quite an extent through plugging tax leakage.”
Aniket Jindal, Co-founder, Biconomy
A blockchain based digital rupee has the potential for being a big step in onboarding 100s of millions of Indians into the blockchain economy
“The blockchain based digital rupee is a welcome step. While the critics rightly point out that it’s not decentralized and issued by the govt, we need to understand that the mainstream adoption of web3 and crypto won’t happen overnight. It will happen slowly with small steps toward our eventual goals. And such a blockchain based digital rupee has the potential for being a big step in onboarding 100s of millions of Indians into the blockchain economy. It will also help open one of the largest economies to new innovations in the web3 ecosystem.”
Aishwarya Shivakumar, CEO, Oddz Finance
Clarity regarding taxation of virtual assets helps clear out ambiguities regarding the government’s sentiments around cryptocurrencies as the ambit of the Finance Ministry has expanded towards the cryptocurrency and digital assets sector
“The inclusion of the crypto and blockchain sector in the Union Budget 2022 is a welcome step taken by the Government of India. With the announcement of RBI launching its own digital currency using blockchain in 2023, the awareness of the technology and the economics surrounding it is only bound to increase. This announcement also implies a positive outlook of the government towards this technology and its potential.
“Furthermore, clarity regarding taxation of virtual assets helps clear out ambiguities regarding the government’s sentiments around cryptocurrencies as the ambit of the Finance Ministry has expanded towards the cryptocurrency and digital assets sector. Income from the transfer of digital assets entails taxation of 30% along with a 1% tax on the transaction. This seems to be on the higher spectrum but it is a start and we hope to go only forward from this. We are further looking forward to seeing how it fares in more detail in the coming months.”
Aman Sanduja, Founder, Moving
Being one of the first countries to tax cryptos is an example and benchmark of democracy
“30% tax on cryptocurrency is a strong step towards acceptance of the technology and recognizing it as an asset class. Soon regulatory body would be announced as well. This bold step would give confidence to the new entrants and existing investors to invest and become a part of this revolution. India is leading the show from front, being one of the first countries to tax cryptos is an example and benchmark of democracy. We all gonna make it happen. Congratulations to the early adopters, believers, influencers, and regulators.”
Vivek Saxena, CEO & Co- Founder, Thinkly
Making it illegal and driving it underground would’ve done this asset class more harm
“While some of the bitcoin and other crypto asset investors might be disappointed with the 30% tax, the silver lining is that the government has taken a nuanced view around it and recognised digital assets as part of the evolving future – making it illegal and driving it underground would’ve done this asset class more harm”.
Jai Prakash, Co-founder & CEO, VRXtream
It is wonderful to know that RBI will introduce the blockchain powered digital currency. This would certainly give an impetus to the participation of institutional players in the blockchain space
“This has been a digital and growth oriented budget. Although the government has not proposed any bill on crypto, the two regulatory clarifications from the FM has made a lot of things clear for this nascent but booming industry.
“It is wonderful to know that RBI will introduce the blockchain powered digital currency. This would certainly give an impetus to the participation of institutional players in the blockchain space.
“Also, the announcement of 30% tax on the transfer gains of digital assets is most welcome as it establishes the legitimacy of crypto trading in India. Hoping to see that as the new class of assets finds more traction with the people, cryptocurrencies are recognised and widely adopted as the alternative investment vehicles.”
