As the world stands divided when it comes to regulating cryptocurrency, India made a decision. It took years of debates, a temporary ban from the India Central Bank, and a Supreme Court ruling to get India to eventually classify cryptocurrencies as digital assets.
New Crypto Taxation Scheme
The new Finance Bill 2022 includes a new taxation scheme for Bitcoin and other cryptocurrencies. According to the Bill, cryptocurrency will be taxed at a rate of 30%, be it a gain or income.
On the other hand, stocks are taxed at 15%, just like the ordinary income of about $1,300.
Unfortunately, separating cryptocurrencies and imposing a 30% tax on capital gains and income in these assets makes India uncompetitive for cryptocurrency business.
On the other hand, legalizing Bitcoin and other digital assets definitely removes the uncertainty that businesses had within the last few years.
Lakshika Kothari, Vice President at the cross-chain liquidity Router Protocol, states that he’s excited to see the Indian finance minister discussing gains from cryptocurrencies. He also notes that this is a historical move towards making crypto legal in India.
Kothari also believes that if India proceeds this way, it can become a hub for the Web3 ecosystem.
However, with this high tax rate, many businesses will move operations offshore. Still, chances are the tax rate will be lowered in the years to come.