Taxability of Bitcoin in India ?
In the fiscal year 2022-23, the government plans to create a Digital Rupee, or Central Bank Digital Currency (CBDC). In addition, the Budget suggested a 30% tax on virtual assets (all private cryptocurrencies and virtual digital assets except digital rupee), thereby legalizing the trade of private cryptocurrencies and non-fungible tokens. This is in accordance with the Centre’s aims to create a fiat digital currency while prohibiting private virtual currencies from being used as legal money. The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime. From April 1, 2022, the government would charge a 30% tax on any gains generated from private digital assets. The provisions relating to 1% TDS will take effect on July 1, 2022, and profits will be taxed on April 1 of that year. There will be no deductions for any expenditures or allowances while calculating such income, save for the cost of purchase.
30% crypto tax and its implications in India
Indians have had different reactions to the 30% tax on Bitcoin income. Some argue that the government’s 30% tax rate on cryptocurrencies means it’s on par with gambling and speculation. Within hours of launching a petition to repeal the 30%, it had surpassed its initial goal of 50,000 signatures. Some people are relieved that a framework for taxing cryptocurrencies has been established. However, for most people, a 30% tax was the lesser of two evils, the other being an outright prohibition. In India, dealing in cryptocurrency is lawful as long as the government does not make it illegal. By definition, tax law cannot legitimize transactions or commodities. Tax rules apply even if there is no regulatory clarification.