Investors welcome 30 per cent tax on crypto transactions

“Let’s assume that I bought cryptocurrency worth Rs 1lakh two months back which is now valued at Rs 2 lakh. So, if I sell it off now, my capital gain will be Rs 1lakh. I am fine with the Centre imposing 30 per cent tax and 1 per cent TDS on this amount. Though I am happy with this announcement, I have hope that the government will decrease the tax amount in future,” Saikat Mitra, a 26-year-old cryptocurrency investor told The Indian Express.

“Even the government needs some revenue. So, if you earning double or triple on cryptocurrency, you shouldn’t mind paying 30 per cent tax. The cryptocurrency market in India is huge and the govt has a big opportunity to gain revenue. The government had every right to do what it wanted to with digital assets. This is better. Tax on cryptocurrencies won’t impact the lifestyle of the middle class. So far, people were in dilemma (on whether to invest in cryptocurrencies). The inclusion of digital currencies in the Budget itself is something to celebrate,” Mitra added.

While delivering her Budget speech, Sitharaman proposed a 30 per cent tax on income from transactions in cryptocurrencies and to bring such digital assets under the tax net. She also proposed a 1 per cent TDS (tax deducted at source) on transactions in such assets above a certain threshold.

Gifts in digital assets will also be taxed, she added. The tax proposals will come into effect from April 1 after the passage of the Union Budget in Parliament. The Reserve Bank of India (RBI) will launch a ‘Digital Rupee’ based on blockchain technology in 2022-’23, the finance minister announced.

“When you win a lottery or a game show, you pay tax to the government on the winning amount. We pay tax on everything. People like myself, who invest nominal amounts, should be happy. It is better that the government impose tax on cryptocurrencies as it is a way of recognising and regulating such digital assets,” Sunil Soni, another cryptocurrency investor who works in the logistics industry, told this newspaper.

Experts said  the tax announcement shows clarity in the government’s future plans around cryptocurrencies. “The taxation of digital assets is a welcome move for investors. However, the tax rate is on the higher side and, in a way, it also discourages transactions in cryptocurrencies as the RBI is also planning to launch its own digital rupee. Introducing TDS on crypto trade is an intelligent move as it  enable the government to get the necessary data,” Rohit Kumar, a cryptocurrency investor in his mid-thirties, said.