New Delhi: In a big boost to cryptocurrency enthusiasts, Finance Minister Nirmala Sitharaman Tuesday introduced a 30 per cent tax on digital assets, essentially meaning the Narendra Modi government is moving towards legalising cryptocurrency as a legal asset.
The industry has welcomed the move.
Nischal Shetty, founder & CEO of WazirX India, told ABP News: "Clarity on income tax is a hugely positive step for the crypto industry. This also removes any fear people had about the impending ban. We now know that the Government is definitely inching towards regulations in this sector."
Dr Arun Singh, global chief economist, Dun and Bradstreet, believes that the taxation of Virtual Digital Assets without setoff of loss with any other income is an indirect approval for cryptocurrencies.
BankBazaar.com CEO Adhil Shetty believes that the taxation of virtual assets is now clearly defined. "So we now at least know what tax filers can expect this year. Individuals might have wanted lower LTCG taxes and carry forward losses similar to equity or housing. But this is at least a start."
According to Keyur Patel, co-founder and chairman of GuardianLink and BeyondLife.Club, the Union Budget at this juncture is as varied as possible when it comes to its stance on crypto and NFTs.
"Virtual assets as lumped into one by Government implies crypto and NFTs all under same bucket. For crypto No deduction other than cost of acquisition to be allowed and No set off permitted against other income or losses, as well as Tax withholding to be triggered on sale at 1% beyond certain threshold. This implies huge friction initially until the user base understands that all asset classed must be taxed for the holistic economic growth, Initially in the space it will create major roadblock for the investor community but like all eco systems, this too shall evolve. This asset classes being treated differently creates one sided tax implication versus using Crypto as traceable asset and NFTs or Gaming Virtual Goods are Entertainment Assets / Collectible assets like Digital Music or Digital Art. It is version 1.o of the framework, while we understand regulation to control other elements of crypto are required."
He said NFTs are in a nascent stage and with such taxation they will have to eventually adjust to grow the developing ecosystem. "Worldwide, NFTs are still classified as non taxable assets, and it is imperative that the adjustment in understanding that Cryto Token is different than digital NFT is token is taken into consideration for future amendments and allow industries like Gaming, Interactive Immersive Museums and other edutainment NFT frameworks succeed without tax burden," he said.
Sitharaman also announced that India will have its own digital currency this year.
The Reserve Bank of India (RBI) is likely to launch the Central Bank Digital Currency (CBDC), using the blockchain technology, later this year.