India plans to impose a 30% crypto tax and a CBDC by 2022-23

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Finance minister of India Nirmala Sitharaman proposed the launch of a central bank digital currency (CBDC) by 2022-23 as a way to promote the country’s economic growth in an address outlining the budget for 2022.

While declaring the fund allocation specified in the Union Budget, Sitharaman emphasized the need for digitization across a variety of business verticals.

She added that the introduction of a CBDC will give the digital economy a “big boost” when discussing the launch of a digital rupee. She also mentioned how digital currencies could provide a more efficient and cost-effective money management mechanism.

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“It is therefore proposed to introduce digital rupee using blockchain and other technologies to be issued by the Reserve Bank of India, starting 2022-23.”

Investors in India to face 30% crypto tax

In addition to the development of a digital version of the Indian rupee, Sitharaman proposed a 30% crypto tax that would apply to all transactions of virtual digital assets. 

“Any income from the transfer of any virtual digital asset shall be taxed at a rate of 30%,” she proposed. Except for the cost of purchase, no deductions in respect of any expense or allowance shall be made for computing such income, she added.

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Any income from transfer of Virtual Digital Asset shall be taxed at 30% : FM @nsitharaman#Budget2022 – 2023#AatmaNirbharBharatKaBudget pic.twitter.com/J88YTIGPz5

— All India Radio News (@airnewsalerts) February 1, 2022

Any losses incurred while dealing digital assets, according to the finance minister, cannot be used to counterbalance any other source of income. In other words, investors will not be able to use cryptocurrency losses or hacks to offset taxation on earnings. The country recently released a warning against crypto-related risks and frauds.

Sitharaman also recommended a 1% tax deduction at source (TDS) above a yet-to-be-determined threshold in order to maintain track of crypto investments in the nation.

The Lok Sabha, a local Indian news outlet, reported that a parliamentary research group had scheduled a crypto-focused training for tomorrow, February 2.

India seems divided on the crypto wishlist just before the Union Budget session. A bill that may potentially outlaw crypto in the country is no longer on the parliamentary business agenda for the lower house of parliament.

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