After Russia, India would also consider taxing cryptocurrencies

Second most connected country in the world, India wants to react to the enthusiasm generated by cryptocurrencies and NFTs. Indian Government Finance Minister Nirmala Sitharaman evoked the urgency of regulating this new market which is gaining momentum in the country. Subsidiary of Binance, the WazirX platform recently declared that the annual trading volume exceeded $43 billion in 2020, growing by 1,735% compared to 2022. An impressive progression that attracts big investors like Andreessen Horowitz in India .

“The scale and frequency of these transactions have made it imperative to provide for a specific tax regime”, says Nirmala Sitharaman. After having raised the possibility of banning cryptocurrencies, India now plans to regulate the sector with the implementation of several measures. The country plans to introduce a 30% tax on all income from transfers of virtual digital assets. This concerns sales and exchanges involving cryptocurrencies or NFTs.

The Minister of Finance also confided that“no deduction for expense or allowance is allowed in computing such income, except for the cost of acquisition”. “Furthermore, the loss resulting from the transfer of a digital asset cannot be compensated by any other income”, she adds. The project also provides for a 1% tax which will be deducted at source on payments made for the purchase of virtual assets.

A “digital rupee” from 2023

Moreover, India plans to launch a digital currency as early as next year. This “digital rupee” will be introduced by the end of March 2023 as India’s central bank has ramped up trials in recent months. They were used in particular to assess the impact that a digital currency could have on the country’s banking and monetary systems. « The introduction of a Central Bank digital currency [MNBC] will give a big boost to the digital economy. Digital currency will also lead to a more efficient and less expensive currency management system”, says Nirmala Sitharaman.

The Indian government’s proposals echo that of Vladimir Putin. The Russian president would consider taxing cryptocurrencies while the Central Bank of Russia is campaigning for the banning of this technology. While the sector sees bad news from China and Kazakhstan, the Indian announcements appear like a thinning in a cloudy sky.

However, they are not unanimous and the spokesperson for the main opposition party has multiplied the criticisms. On the social network Twitter, Randeep Singh Surjewala regrets the absence of a regulator, investor protection and regulation of cryptocurrency exchanges.