The crypto market and social media were abuzz yesterday when India's finance minister Nirmala Sitharaman unveiled her fourth Union Budget, commonly termed "Budget 2022." The session had a lot of takeaway for the Indian nation and its people. But the one that created waves across the global news channel and media was cryptocurrency.
The finance minister had announced that a 30% tax charge would get placed on income from the transfer of any virtual digital assets. Furthermore, she also said that any loss caused by the sale of the digital asset would not offset against other incomes. People made a lot of speculation on this move made by the Indian government. The reaction has been highly mixed as some people have hailed the move while others have been critical of it. As a result, there is a lot of confusion around cryptocurrency in India. After all, India comprises 10% of the crypto users in the world.
Today's world has nearly 150-200 million crypto users, and India's crypto user numbers are between 15-20 million. A cryptocurrency is a decentralized form of money that has gained a significant user base in the past couple of years. However, countries have stayed divided on cryptocurrency. Some governments have adopted crypto as a valid currency, while others have banned its use altogether. Also, some countries have legalized some forms of cryptocurrency, mainly Bitcoin.
As a fast-developing nation with the largest youth population, India has always remained a topic of cryptocurrency discussion. People have always debated whether and when cryptocurrency will get legalized. And yesterday, February 1, 2022, became the day when the world, especially the people of India, received its answer.
Cryptocurrency has been legalized in India but with a catch. There will be a 30% tax on cryptocurrency gains and another 1% TDS on payments beyond Rupees 10k. Furthermore, the 1% TDS on prices will be effective from July 1, 2022. However, the taxation on the cryptocurrency gains will be in effect from April 1, 2022. So, what does it mean?
Let's check some key takeaways to understand what it means for the future of cryptocurrency, especially in India.
Several economists and cryptocurrency experts have named the move as crypto tax. They have further added that the 30% tax levied on the cryptocurrency gains is similar to winning a lottery or a game show.
The Finance minister of India has announced that the RBI (Reserve Bank of India) will launch its blockchain technology-based "Digital Rupee" in 2022-2023. Some experts have called the move the death of cryptocurrency in India. Rakesh Jhunjunwala has compared the movement to the one made by China. He further said that India is looking to ban all other forms of cryptocurrency and, in return, will have its crypto coin launched. He even mentioned that while this may be a death of active crypto coins in the market, overall, it is the right move for India.
People put a lot of questions on India concerning cryptocurrency. The Nangia Andersen Indian Chairman Rakesh Nangia has been quoted by asserting that the government has essentially walked the talk on cryptocurrency. They are considering a stable and predictable tax regime and have levied a 30% tax on the transfer of virtual assets.
So, overall considering the takeaways as mentioned earlier, it is safe to say that cryptocurrency is here to stay in India. Legalizing cryptocurrency was likely to happen after the nation has witnessed a gain of more than 600% users of crypto coins. However, until the verdict on the cryptocurrency law comes out, predicting the future of current active cryptocurrency trading will remain challenging. So, taking caution while you invest in cryptocurrency must have to be the way to go.
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A lone wolf by definition, a writer by heart, and a lost star with ambitions to light up the dark both inside and around me, sometimes by immersing myself into books or video games or traveling with a backpack to an uncertain destination believing that life is all about the choices we make and we don't.