- Income from virtual assets to be taxed at 30%, minister says
- Plans to introduce digital rupee in fiscal year starting April
Cash-dependent India joins countries including China in pushing forward with digital versions of their currencies as they look to harness new technologies to make transactions more efficient. At the same time, the steep tax rate on crypto could dissuade trades that have been soaring in India despite the central bank’s warnings about the risks of money laundering, terrorist financing and price volatility.
“Imposing the tax rate makes crypto trading official now and any concern of a ban is off the table,” said Darshan Bathija, co-founder and chief executive officer of Vauld, a crypto exchange platform based in Singapore. Still, the relatively high tax rate could prompt traders to move to platforms in other countries, which would reduce revenue for the Indian government, he added.
“There’s been a phenomenal increase in transaction in virtual digital assets,” Sitharaman said. “The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime.”
The finance minister said the launch of a digital rupee will usher in cheaper, more efficient currency management. The Reserve Bank of India has been working on a phased implementation strategy, which could reduce the nation’s high dependency on cash.
China already began trials of its central bank digital currency in several cities, and even plans to roll out its digital yuan for use by athletes and spectators at the Beijing Winter Olympics starting this week. The U.S. Federal Reserve and Bank of England are also looking into possibilities for their economies.
Other key points on crypto assets from the budget speech include:
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