India will impose a tax of 30% on income from cryptocurrencies and other digital assets, finance minister Nirmala Sitharaman said while presenting the Union budget today. The finance minister also revealed that the country’s central bank will issue a national digital currency in the upcoming year. Industry estimates suggest 15 million to 20 million crypto investors in India with total crypto holdings of around 400 billion rupees ($5.37 billion).
Losses from cryptocurrency sales could not be offset against other income.
Aside from placing earnings from cryptocurrencies and non-fungible tokens (NFTs) in India’s highest tax band, Sitharaman also said losses from their sale could not be offset against other income, delivering another disincentive to trading and investment in digital assets. Proponents of cryptocurrencies have been hoping that establishing a formal tax framework could at least spare the crypto industry from some of the more draconian measures that the government had been considering. As reported earlier, India’s central government had been planning to outlaw cryptocurrencies completely. The finance minister has officially announced a 30% tax on cryptocurrencies, which is giving the industry acknowledgment.
Thirty percent tax on crypto income is a positive step as it legitimizes crypto.
“Thirty percent tax on income from virtual digital assets, while high, is a positive step as it legitimizes crypto and hints at an optimistic sentiment towards further acceptance of crypto and NFTs,” said Avinash Shekhar, chief executive of ZebPay, a cryptocurrency exchange.
Tax consultants reckoned individuals could end up paying more than 30per cent of their crypto profits in tax and other charges. As reported earlier, crypto exchanges also hoped the new tax regime would signal acceptance of digital currencies by the authorities and reassure corporates that they could enter the market.