India announced plans to introduce a digital currency next year and tax cryptocurrencies and non-ferrous tokens on Tuesday, as the world’s second-largest internet market draws closer to recognizing cryptocurrencies as legal tender.
Finance Minister Nirmala Sitharaman said that all digital assets will be taxed at a rate of 30%, with no discounts or exemptions. This includes anything from cryptocurrencies to non-fungible tokens (NFTs) and various forms of digital asset income such as yielding, farming, and mining.
“With the exception of the cost of acquisition, no deduction in respect of any expenditure or allowance shall be permitted in computing such income.” Furthermore, any loss from the transfer of a digital asset cannot be offset against any other income,” she stated in one of New Delhi’s most notable federal budgets centered on technology and industry. “It is also proposed that gifts of virtual digital assets be taxed at the recipient’s hands.”
Despite regulatory ambiguity, the idea comes at a time when the buying of cryptocurrencies and NFTs is swiftly gaining traction in India.
WazirX, which is owned by Binance, announced last month that yearly trade volume on its platform hit $43 billion in 2021, an increase of “1,735 percent” from 2020.
With the growing popularity of crypto tokens, a set of firms has emerged to innovate in the field, however, their aggressive marketing tactics have raised some eyebrows.
Last year, Andreessen Horowitz made its first investment in India, financing CoinSwitch Kuber, a cryptocurrency exchange.
She also stated that India’s central bank will launch a digital currency in the coming fiscal year. For some months, the country’s central bank has been putting the CBDC through a series of controlled trials around the country, studying its influence on the banking and monetary systems.
India’s initiatives have added to the confusion among entrepreneurs, venture investors, and the general public about how the country intends to deal with cryptocurrencies.