In India’s annual fiscal budget 2022, the country has finally given official recognition to digital currency. The finance ministry has proposed taxation on cryptocurrencies, starting with Bitcoin and Ethereum. Nirmala Sitharaman, the finance minister of India, has also announced the launch of a digital asset owned and managed by the Reserve Bank of India.
As announced, 30% tax will be levied on the profit income coming from cryptocurrencies. Furthermore, the new regulations will not be able to balance out losses incurred from the sale of cryptocurrencies against other income.
Since the tax introduction implies acceptance of cryptocurrencies in some way, the new policies have not hurt their stock prices. This includes cryptocurrencies such as Bitcoin, ETH, WRX, SOL, ADA, DOGE, and MATIC. The crypto investor fraternity has welcomed the new tax policy.
While announcing the launch of RBI-owned digital currency, the finance minister differentiated between cryptocurrencies in the market and currency that is yet to be issued by RBI. “not taxing currency that is yet to be issued,” she specified.
“I said the Reserve Bank (of India) will be issuing a digital currency. A currency becomes, or, a currency is a currency only when it is issued by the central bank, even if it is crypto. Anything outside of that, even loosely all of it referred to as cryptocurrencies; they are not currencies,” Sitharaman added.
The Indian crypto market space has witnessed ups and downs in the form of acceptance from the government. It has been under scrutiny by the regulating authorities since the beginning.
Owing to the increasing number of fraudulent cases in the crypto area, the Supreme Court of India had banned cryptocurrencies in 2018. The ban was lifted two years ago.
According to industry experts, the number of crypto investors in India is estimated to be around 15-20 million. Most importantly, $5.37 billion crypto stocks are being invested in the market. However, the data is not validated by any official reports.
Looking at the present stage of cryptocurrency legalization, regulation, and taxation, the Indian crypto market is projected to grow by a larger percent in the coming years. According to market research reports, the industry is expected to have exponential growth of 650% in the next five years.
The U.S., South Korea, China, and a few European countries have been actively involved in regulating the crypto market space. With the fiscal budget 2022, India has made its official addition to the list.