Cryptocurrencies are legal from now on in India. This is evidenced by the proposal to introduce a 30% income tax on digital assets. Meanwhile, India is also betting on a Central Bank Digital Currency or CBDC.
Local law finally gets clarity
Citizens of the world’s second most populous country are finally getting a clear signal about owning digital assets. Finance Minister Nirmala Sitharaman revealed that in the latest draft of the 2022 budget, there is a line item titled “Tax on Cryptocurrencies” and it indicates a tribute of 30% on the amount of profit from the sale of such assets.
Despite the fact that the tax is very high by general global standards, this regulation generates a lot of satisfaction. The CEO of local exchange WazirX Nischal Shetty expressed his position on it:
“Tax transparency is a welcome move. Overall, we are extremely relieved to see our government adopting a progressive stance to move towards innovation. By introducing taxes, the government is largely legitimizing the industry. Most people, especially corporations that have been sitting on the sidelines due to uncertainty, will now be able to participate in the cryptocurrency market. Overall, this is a positive move for the industry.”
Recall that India is a country where for a long time there has been no clear position of the rulers on the issue of cryptocurrencies. Bitcoin itself was often subjected to public debate, from which a significant number of delegates advocated its complete ban. This has often had an impact on the market, particularly on projects with close ties to India. The new decisions and the tax associated with them is a signal that India has decided to cut the rumors once and for all and allow its citizens to trade in virtual goods.
In the meantime, work continues on CBDC
Nirmala Sitharaman also indicated that work is underway at the Ministry of Finance to develop a central bank virtual currency (CBDC). Interestingly, India’s efforts differ from those of China, where the introduction of CBDC coincided with the public’s disconnection from the cryptocurrency market. The level of commitment and the effective date of the national project are not yet known.