India’s Finance Minister Nirmala Sitharaman announced the country’s fiscal budget today, where she made it clear that the government will not ban crypto.
To everyone’s surprise, India has embraced crypto and has plans to launch its own CBDC by 2023. Previous reports of intense scrutiny by the Indian authorities, especially the Securities and Exchange Board of India (SEBI), wanted to extend its jurisdiction to keep an eye on the crypto industry.
However, Sitharaman has clarified that crypto will not be banned but regulated and taxed. Complete details of regulations and the answer to which regulatory authority will regulate crypto? Is awaited.
All receivable digital asset gifts will be taxed (to the giver), and there will be no deductions on taxes related to gains from crypto trading. Deductions are offsetting your losses from one income to another income so that you are not charged according to the regular tax slab. The government has barred investors from offsetting losses in crypto against other income.
India became one of the first countries to announce a Central bank digital currency. The finance minister said that CBDC would help with financial inclusion, and the cost of handling CBDC is much lower than physical fiat currency.
With a 30% tax on crypto, it is the highest tax band for any asset charged by the government. Through this decision, the government has reflected that it is allowing crypto to be traded as an asset, although not as a mode of payment but to be held like shares of gold.
Reserve bank of India has previously alerted the government and Indian citizens that crypto can lead to financial instability, micro/macro-economically.