The Indian government has announced that cryptocurrencies will soon be taxed in the country. The measures will soon be implemented, but there is still a major problem: cryptos are still not legal in the country.
In India, cryptocurrencies will be taxed from April 1, 2022 – even if they are not officially legal yet. This is what Nirmala Sitharaman, the Indian Minister of Finance, declared on February 21, the date of the signing of the new Indian budget law: “I do not intend to wait for crypto-currencies to be regulated to tax people who make a profit from it.
The news has put professionals in the sector, but also individuals, in a strange situation. India is, with more than 100 million citizens owning cryptocurrencies, the first country in the world in terms of users. Many wanted to see the new budget law as a sign that the government was finally legalizing the use of crypto-assets, but the situation is far from clear.
The details of the law
The new Indian budget law specifies several things, but the most important is this: all profits related to the sale of crypto assets will be taxed at a fixed rate of 30%. The government also announced a 1% withholding tax on all crypto transactions. Since March 21, Indian authorities have also clarified that gains made from the sale of crypto-assets may not be considered “financial services”, but maybe considered “lottery winnings”.
For now, it is not so much taxation that worries the crypto community in India, but the question of legality. As soon as the new Indian budget law was announced, the Binance exchange platform tweeted that “crypto had just become legal in India”. However, the reality is far from being so simple. Jagannath Bidyadhar Mohapatra, the head of India’s tax agency, confirmed to CoinDesk that this new rule “does not change the legal status of bitcoin, which will be defined when the Digital Assets Regulation Act is passed by Parliament.”. For now, therefore, crypto is not legal – even if the sale, purchase, and exchange of cryptocurrencies are not strictly prohibited in the country.
