By now, all of us understood what cryptocurrencies are and why they are so popular. Investing in cryptocurrency in 2022 is a must as they are believed to be the future currency. Investing in crypto is risky but also extremely profitable in the long run. The decentralized structure of cryptocurrencies allows them to stay outside the control of govt and central authorities. Another reason why cryptocurrencies are so popular, is due to their thorough transparency, owing to open source and publicly verified technology. It works in a peer-to-peer network where many computers are connected and working together through blockchain, making it a secure network. Another reason crypto is being the main attraction of the market is that it is very easy to trade in crypto. You can check out this article regarding the purchasing process of cryptocurrencies.
Investors prefer to invest in crypto because their value is rising every day and is going to be the future currency. Cryptos are seen as a store of value and are expected to replace gold in the future.
However, Cryptocurrencies or any other activity related to cryptocurrencies is banned in India, according to the government the main reason is that cryptocurrencies are being used to funnel money to illegal sources. The main reason India not legalizing cryptocurrency as legal tender is the possibility of it being misused for unlawful activities. Though imposing a blanket ban in this sector is difficult to implement, as India has a large crypto user base.
On 2nd February 2022, Finance minister Nirmala Sitharaman has introduced a crypto tax regime in India. In budget 2022-23, the government took a conservative stand by announcing a 30% tax on income from digital assets or crypto irrespective of the income slab. That means even in case of loss, you need to pay the 30% tax. She further added gifts in virtual assets would be taxed by the recipient. Though the announcement of the tax rule did not affect the price of the popular tokens listed on the Indian exchange. The finance minister also added that by 2023, a blockchain-based RBI-backed Central Bank Digital Currency (CBDC) will be introduced in India.
With the announcement of the new tax regime rule, many believed that the government took the decision of legalizing cryptocurrencies in India. With that, the question arises whether the decision is right or not. On 11th February Sitharaman said that banning or not banning cryptocurrencies will come after consultations. She stated, “ The government has sovereign right to tax profit made from cryptocurrency transaction, and the decision of banning or not banning will be based on feedback from consultations. I am not doing anything to legalize or ban cryptocurrencies at this stage, we have only taxed the emanating from the transactions.”
However, from her mention of the introduction of CBDC, we can assume that by 2023, India will have its own digital currency, backed by blockchain technology. This will help India to move a step toward the digital world.
Conclusion:
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