A positive outlook towards Crypto and blockchain is finally in black and white now! 1 February 2022 has made a mark in the history of Crypto. India is finally on the path to legitimising the crypto sector. This progressive stance from the Government has validated the industry to a large extent. The Government is definitely not thinking of a ban anymore!
Our Finance Minister has indicated that Crypto falls under the 'virtual digital assets' bucket and is a special asset class. We stand by her words that Crypto is not a currency. On the other hand, a digital currency, governed by the RBI, is also on the cards. It's a piece of phenomenal news that India is launching a blockchain-powered Digital Rupee soon. This move will pave the way for crypto adoption and put India in the front seat of innovation and adoption to web 3.0.
Most of the Indian crypto investors have been self-reporting crypto-related income in their income tax returns so far. Now, with the introduction of sections 115BBH (Tax on income from virtual digital assets) and 194S (Payment on transfer of a virtual digital asset), clarity on taxation and Government validation is received. In simplest terms:
- Section 115BBH: From Financial Year (FY) 2022-23, any income earned (sale consideration (minus) cost of acquisition) from the transfer of virtual digital assets like Crypto and NFT will be taxed at 30% flat.
- Section 194S: From 1 July 2022, any person (purchaser) responsible for paying any sum as consideration (in cash or kind) for the transfer of a virtual digital asset will have to deduct 1% tax and deposit this tax amount with the Government (subject to conditions). More clarity on the operational aspects of this provision is yet to be received.
- Section 56: In addition to the above, virtual digital assets received as gifts will have to be disclosed and offered for tax (by the receiver of the gift) under the head ‘Income from other sources'.
While this is a concise interpretation of the law as it is, more clarity from the Government is expected soon. In the interim, the Crypto markets have reacted positively to these developments, and there has been a significant increase in the BUY market.
In addition to this, our FM also pointed out that this budget of 2022 seeks to generate employment opportunities for the youth. As an industry and with the recognition given by the Government, we can confidently say that the crypto sector holds immense potential to create job opportunities as well as contribute to India's $5 Trillion economy vision. Our GDP can benefit immensely from Crypto!
Another aspect that we should consider is, from now on, that majority of people, especially corporates, who had been on the sidelines because of the uncertainties will now be able to participate in Crypto. No doubt, some short-term falls in the market can be expected. But then, there is nothing to worry about as from now on; we can witness several seasoned and serious investors stepping in.
Furthermore, we also look forward to a lot many banks and financial partners supporting exchanges like WazirX.
With the Budget announcement taking cognizance of this landscape, we await the legal implementation of this emerging asset class in India. This is just the beginning and not the endgame. Lots of positive things are possible and are in store from here. We will keep you posted on the developments. In case of queries, you can reach out to our support team here.
Congratulations Tribe, for this win!
Thank you for standing by our side throughout, and we look forward to your continued support as #IndiaWantsCrypto