India will also launch its own digital currency in April
The Reserve Bank of India will launch its digital currency on April 1, Finance Minister Nirmala Sitharaman said on Tuesday. The country also plans to tax the income from the transfer of virtual assets at a rate of 30%, she added.
To capture details of all such crypto transactions, the minister also proposed a 1% tax deduction at source on payments made related to the purchase of virtual assets.
“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 asset cannot be set off against any other income,” she said, adding “Gift of virtual digital asset is also proposed to be taxed at the hand of the recipient.”
Purchases of cryptocurrencies and NFTs in India have been on the rise despite regulatory pressure. Binance-owned WazirX said last month that the yearly trading volume on its platform exceeded $43 billion in 2021, at a “1,735%” growth from 2020.
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“There’s been a phenomenal increase in transaction in virtual digital assets,” Sitharaman said. “The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime.”
India’s central bank has long been working on a phased implementation strategy, which could reduce the nation’s high dependency on cash. According to the finance minister, the launch of a digital rupee “will give a big boost to digital economy” and lead to a “more efficient and cheaper currency management system.”
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