Union Budget 2022: Crypto Assets or Gambling Wins?
The Finance Secretary refused to call crypto “currencies” and emphasized calling them crypto “assets” in a recent interview. Owing to the growing interest of people, especially the youth, in crypto and NFTs, everybody is talking about them. It was talked about in the Union Budget for the 2022-23 fiscal year. According to the Budget presented on February 01, all of the income generated from crypto is taxable at the rate of 30%. This not only raised questions about whether crypto is legal in India but also gave rise to concerns from investors or companies that deal with crypto.
During the Bloomberg Daybreak: Middle East interview held on February 02, the finance secretary, T.V. Somanathan, explained the various aspects of the Union budget 2022. When asked about the government’s stance on crypto, he answered, “Crypto assets are currently neither illegal nor are they encouraged.”
According to an October report by the industry research firm Chinalysis, the Crypto market has grown 641% in the year through June. Mr. Somanathan went on to explain that even though crypto is not completely legal in India, the assets or income gained from it will be treated as gambling wins. The government considers the crypto transactions as speculative transactions, similar to gambling/betting transactions, and will be taxing them at 30%.
Investors and company owners were not thrilled by this news. Some even believe that when the transactions pile on, the tax can turn out to be more than 100% considering that it's volatile. This benign said, the budget mainly focuses on spending on public infrastructure and bringing in private investments. T.V. Somanathan said in an interview on February 03 that crypto will never be a legal tender in India. He said that it operates in the gray area purely. The future of crypto in India is an ongoing debate and will highly depend on the kind of recognition it gets internationally. It is evident that the Indian government is not in favor of legalizing crypto or NFTs anytime soon, but it is great to know that it is not shunning it out either. Several banks plan on launching a “digital rupee” in the next fiscal year. Online trading is considered the future by some, and a 30% tax rate might or might not overshadow the light that the gray area shines on crypto in India.
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