India has announced plans to launch its digital currency and tax cryptocurrencies and Non Fungible Tokens (NFTs) at 30 per cent.
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Finance minister Nirmala Sitharaman made the announcement on Tuesday while presenting the federal budget.
“No deduction in respect of any expenditure or allowance shall be allowed while computing such income except cost of acquisition.
“Further, loss from transfer of digital assets cannot be set off against any other income,” Ms Sitharaman said, adding that “gift of virtual digital assets is also proposed to be taxed at the hand of the recipient.”
Profits made trading cryptocurrencies and other digital assets will be taxed at 30 per cent, while any losses from digital transactions will not be granted offsets against other income.
Ms Sitharaman also said that the country’s central bank, the Reserve Bank of India (RBI), will introduce a digital currency called the digital rupee.
The bank has been testing its CBDC through a number of controlled trials for months, examining its impact on the banking and monetary systems.
“Introduction of a central bank digital currency will give a big boost to the digital economy,” Mr Sitharaman said,“digital currency will also lead to a more efficient and cheaper currency management system.”
Last July, T Rabi Sankar, the deputy governor of Reserve Bank of India, had said the central bank was considering introducing the nation’s digital currency in a “phased” manner while legal changes were being made to the nation’s foreign exchange laws and IT laws.
In November, The ‘Cryptocurrency and Regulation of Official Digital Currency’ bill was introduced to create a framework for the official digital currency.
Under the bill, cryptocurrency trading is punishable with a fine or imprisonment of up to 10 years, or both.
India’s central bank had voiced “serious concerns” around private cryptocurrencies on the grounds that these may cause financial instability.
Though the proposed legislation recognised the advantages that virtual assets have such as better record-keeping and efficient cross-border payments, it noted money-laundering risks to consumers and threats to the country’s financial stability as concerns for its potential use.
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