India has announced plans to launch a digital currency by next year and tax cryptocurrencies and NFTs as the country moves closer to recognizing cryptocurrencies as legal tender in the world’s second largest internet market.
Income from the transfer of any virtual assets will be taxed at 30%, the nation’s finance minister Nirmala Sitharaman said Tuesday. To capture details of all such crypto transactions, she also proposed a 1% tax deduction at source on payments made related to purchase of virtual assets.
“No deduction in respect of any expenditure or allowance shall be allowed while computing such income except cost of acquisition. Further, loss from transfer of digital asset cannot be set off against any other income,” she said in one of New Delhi’s most remarkable tech and business-focused federal budgets. “Gift of virtual digital asset is also proposed to be taxed at the hand of the recipient.”
The proposal comes at a time when the purchase of cryptocurrencies and NFTs are quickly making inroads in India despite regulatory uncertainty in the nation.
Binance-owned WazirX said last month that yearly trading volume on its platform exceeded $43 billion in 2021, at an “1,735%” growth from 2020.