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India recently announced that it will impose a tax on income from cryptocurrencies. While some are worried that the introduction of a crypto tax might discourage retail investors, others view the development positively as it could be a step towards the legalization of digital currencies in the country.
Indian Finance Minister Nirmala Sitharaman announced that a 30% tax will be levied on any income from the transfer of virtual digital assets. “There has been a phenomenal increase in transaction in virtual digital assets,” Sitharaman said in the Indian budget speech on February 1, Coindesk reported. “The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime.”
While the finance minister did not use the words crypto or cryptocurrency in the speech, she used the phrase “virtual digital asset” which is usually interpreted in India’s crypto industry as a term for cryptocurrencies and non-fungible tokens (NFTs).
Many welcomed the move and viewed it as the first step toward giving crypto legitimacy. “India is finally on the path to legitimizing the crypto sector in India,” Nischal Shetty, co-founder and CEO of one of the country’s largest crypto exchanges WazirX, said.
“You can't tax something which is illegal,” Sidharth Sogani, founder and CEO of cryptocurrency research organization Crebaco, said. “Hence, this is a very positive move by the government and is very good for the industry. If there are tax clarities in this space, more money is likely to come in.”
However, there are some who expressed concerns that the 30 percent crypto tax might trigger liquidation. “There might be movement in people liquidating their crypto portfolios and moving to the equity market,” a source from a major crypto exchange, who wished to remain anonymous, said. “The 30% tax is too much.”
“How will you promote the underlying technology with a 30% tax?" another source, who works at a crypto exchange, voiced his doubts.
However, BuyUcoin CEO Shivam Thakral disagrees and believes that the tax rate is reasonable. “It (the tax) is normal and not too high,” he said. “If you are earning a personal income of more than 12 lakh per annum, then you are in the 30% slab anyway.”
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