The Indian government has formed a regulatory body to overlook the happenings of the cryptocurrency market. However, the rules regarding its taxations have not been specified yet. Reports are doing the rounds that the upcoming Budget 2022 will decide the fate of cryptos in India.
The Economic Times reported that the government has sought opinions from senior tax advisors and is considering treating crypto investments as ‘business income’. As per reports, capital gains from cryptos could be taxed from February 2022.
The government could considerably increase the tax slab to crypto investors and drain out a large portion of their profits. With every single sell transaction being taxed, the process for investors is going to be a tedious one.
The budget could also see the government fine-tuning the difference between income and gains specifically targeted to crypto assets. ET claims that the government is planning to tax crypto investors for as high as 35% to 42% going forward. The tax might also include the GST charges.
The move could change the way people invest in cryptos as investors would prefer to stay away due to high taxation. Taxes on gains are a put-off to investors and could see a decline in crypto investments in the country.
“Even if the payment for any asset, say a painting or another crypto asset, is made in cryptocurrencies, it’s still an income in the hands of the receiver. As cryptocurrency has an underlying value in Indian rupee, it should be taxed as an income,” said Sudhir Kapadia, the national leader of EY India.
India and Cryptocurrencies
India has the highest number of cryptocurrency investors in the world with close to 100-million people investing in the market. Crypto has the attention of the youth trying to make a quick buck. They believe the stock market won’t satisfy their financial aspirations but the crypto market can deliver them the desired results.
Even youngsters from tier-2 and 3 towns have invested in cryptos and the market has a wide reach in the country. For many, the cryptocurrency market is the only way to experience richness. Other means of making quick money remained shut for most Indians due to unemployment and corruption.