India has decided to impose a 30% tax on the income from crypto as well as other digital assets. The crypto tax in India seems to be an initiative towards adopting digital means of earning money in the country. The trade of cryptocurrency is common in India for several years. The Finance Minister of India, Nirmala Sitharaman, announced the new tax imposition while giving a speech about the budget. Given that the Indian Govt is accepting the use of cryptocurrency in the country, it is also concerned about the issues that will come with it.
Why is Govt Regulating Crypto Tax in India?
According to the finance minister of India, the country should be a part of the global trend to make digital assets. Several countries, including the UK, France, Germany, Denmark, Mexico, and Spain have already developed forms of regulation for cryptocurrency to be used in transactions. Now, the Indian minister has also announced that the Reserve bank of India will also launch its digital currency probably in April 2022. Other than that, the plan to impose a crypto tax in India means that the government has cleared all the confusion about accepting digital currency. Darshan Bathija, chief executive officer and co-founder of Vauld (a crypto exchange platform based in Singapore), also said that unacceptability towards crypto is off the table in India.
For now, India lacks the law regulating virtual currency, making it challenging for Indians to have true faith in its innovation plan. Also, when the ban was imposed previously, millions of citizens shifted platforms abroad.
Furthermore, according to tax consultants, the crypto tax in India could be a bad sign for those who might pay more than just 30%. In other words, if a person earns only Rs100, then the exclusion of tax will be more than Rs40, according to Amit Maheshwari, partner at AKM Global, a tax company. Besides, more than 15 to 20 million people are investing in crypto in India with an asset of more than Rs400 Billion, reportedly.
Aside from the setbacks, there are potential threats too, such as price volatility, money laundering, and even terrorist financing due to the steep tax on Indian cryptocurrency.
How India Plans to Regulate Crypto?
India’s proposal confused a lot of entrepreneurs and crypto enthusiasts, stirring debate on how the government planned to tackle cryptocurrencies. Investors wondered whether India was finally able to recognize crypto as a legal tender or was just trying to cash in at the expense of those earning from the technology. Considering how India denied promoting cryptocurrency in December 2021, it must be the latter. The account of PM Modi made a shocking post that the Indian government had purchased 500 BTC but it was deleted soon after. Government officials and state-affiliated media reported that it was probably a hack attempt by someone. They maintained their stance against the use of cryptocurrency but now a month and a half later, they are ready to legalize crypto? It sounds very superficial unless the government is impressed by the crypto trading business going on in India and wants in on the action by imposing a crypto tax in India.