India Recognises Cryptocurrency, Imposes 30 Percent Tax

In what appears like regulation and authorisation for cryptocurrency trading and investment in India, the government has imposed a tax of 30 percent on income from cryptocurrencies and other digital assets.

The Indian financial minister, Nirmala Sitharaman announced during the federal budget presentation on Tuesday.

Apart from adding earnings from cryptocurrencies and non-fungible tokens (NFTs) in India’s highest tax category, Sitharaman also said losses from their sale could not be offset against other income, delivering another disincentive to trading and investment in digital assets.

“Thirty percent tax on income from virtual digital assets, while high, is a positive step as it legitimises crypto and hints at an optimistic sentiment towards further acceptance of crypto and NFTs,” said Avinash Shekhar, chief executive of ZebPay, a cryptocurrency exchange.

Tax consultants, however, said cryptocurrency traders could end up paying more than 30 percent of their earnings amid other charges.

“If you made a profit of 100 rupees then including the 30% tax bracket, plus surcharge and cess the total tax outgo will be around 42 rupees,” Amit Maheshwari, partner at AKM Global, a tax and consulting firm said immediately after the presentation.

Cryptocurrency exchange platforms are now hoping the new tax regime would signal acceptance of digital currencies by authorities, and reassure corporates that they can enter the market.

“We also hope this development removes any ambiguity for banks and they can provide financial services to the crypto industry,” said Nischal Shetty, CEO, WazirX, another virtual currency exchange.

The CEO of the world’s leading cryptocurrency exchange platform, Binance, Changpeng Zhao has already interpreted the move as approval and legalisation of cryptocurrencies in the world’s second most populated country.