01 Feb 2022 Arjun Agarwal
India Puts A 30% Tax On Crypto Profits; Possible CBDC Project?
Cryptos in India may be soon faced with a hefty, 30% tax, according to Indian Finance Minister Nirmala Sitharaman. It turns out COVID-19 induced a massive growth of crypto investors. Furthermore, trading activity on local Indian exchanges has also shot up significantly, which caused billions of dollars to pour into the market.
As of press time, Indian investors have put up somewhere around 400 billion INR or $5.37 billion.
Meanwhile, Nirmala Sitharaman noted that the “introduction of a 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,” Sitharaman added.
The latest announcement is well perceived by the Indian crypto community. An eventual CBDC launch also means that India will have clear and better crypto rules by the next financial year.
India’s CBDC Digital Rupee will be “efficient, robust, trusted, regulated, and a legal tender-based payments option,” according to MoS Finance. However, the Finance Ministry will also take care of the risks that come while weighing its potential benefits.
India’s announcement of the Digital Rupee and the latest introduction of crypto taxes denotes that investors can participate in the crypto market without fears of an absolute ban. The government hopes such a move might lead to further liquidity and participation from Indian investors.
However, the 30% tax could put off retail investors in India. Heavily taxing crypto profits also suggests that the government is stopping crypto investing among retail players. WazirX CEO Nischal Shetty has a different opinion on the matter, as the move might be yet another step towards positive crypto regulations.
“Clarity on crypto tax as well! Income from transfer of any digital asset to be taxed at 30%. No expenditure deduction except the cost of acquisition. Loss from the digital assets cannot be set off. Yet another step towards positive crypto regulations.” Shetty noted on Twitter.
India’s Digital rupee comes amid competing economies like China are already making moves towards CBDC adoption. China is working around the clock to bring its Digital Yuan during the 2022 Beijing Winter Olympics, however, the spread of COVID-19’s latest Omicron variant in the country puts a shadow on its plans.
Meanwhile, as CryptoBrowser.io reported, the U.S. Federal Reserve has also been closely studying the pros and cons of having a central bank digital currency.central banks cryptocurrency news crypto news digital Tax India taxes CBDC