India to introduce State-backed digital rupee and 30% tax on Private crypto

After unveiling its next financial budget, the Indian government announced the creation of a state-backed digital rupee and a 30% tax on profits from virtual currencies.

This plan is a serious hit on one of the world’s fastest-growing crypto markets. India has remained largely unregulated despite hosting a multitude of local trading platforms and celebrity endorsements.

“There has been a phenomenal increase in transactions in virtual digital assets,” finance minister Nirmala Sitharaman told parliament, adding that the growth necessitated a proper tax framework.

According to the proposal, crypto profits will be taxed at 30%, while losses from digital transactions won’t grant offsets against other income. Additionally, a 1% tax will be deducted from the source for digital asset transactions, this includes crypto and NFTs.

“Introduction of central bank digital currency will give a big boost to (the) digital economy. Digital currency will also lead to a more efficient and cheaper currency management system,” said Sitharaman.
Crypto has been under heavy scrutiny in India since first emerging in their local markets almost a decade ago. Last 2018, a surge in fraudulent transactions led to the central bank ban of digital assets. However, in 2020 India’s Supreme Court lifted the ban and the country saw a 650% growth in the industry from 2020 to 2021.

Given these surges, the government held off on an overall ban of all private cryptocurrencies. “It’s good to finally have some clarity on the taxation aspect,” said Sathvik Vishwanath, the co-founder of Unocoin, one of India’s oldest crypto trading platforms.

“Now we can infer that if they are introducing taxation it’s because they know that the ban (on trading cryptocurrencies) is not happening.”

Source: ABS-CBN