Indian regulation｜NFT, cryptocurrency 30% capital gains tax coming, digital rupee expected by 2023

India has passed a 30% capital gains tax on cryptocurrency and NFT without amendments, with the country's finance minister also announcing plans to introduce a digital currency by next year. Additionally, a proposal for a 1% tax on cryptocurrency transactions and a crypto gift tax have been suggested. The CEO of WazirX emphasized that they are awaiting a government industry meeting or considering appealing to the Supreme Court.

30% Capital Gains Tax

According to the budget proposal released by Indian Finance Minister Nirmala Sitharaman in February this year (source), she mentioned in the document:

Digital asset trading has significantly increased, and due to its trading volume and frequency, a specific tax mechanism must be introduced. Therefore, I propose that any income from crypto transactions should be subject to a 30% tax. Except for the cost at the time of purchase, the 30% tax cannot be deducted from any fees or discounts, and any losses cannot be offset against income.

She also suggested that to obtain further transaction details, a 1% Tax Deducted at Source (TDS) should be introduced in crypto transactions. Gifts or virtual assets, which may refer to the recipient or holder of NFT, may also be taxed.

Note: TDS refers to the buyer deducting tax from the payable amount before paying the remaining amount to the seller, thereby avoiding taxation only from capital gains. For more details, refer to pages 23 and 24 of the budget proposal.

CBDC

The document briefly mentions Central Bank Digital Currency (CBDC):

CBDC will support the development of the digital economy, bringing a more efficient and lower-cost monetary management system. It is recommended to develop a digital Indian Rupee (INR) using technologies like blockchain, with issuance starting from the Reserve Bank of India in 2022-2023.

Divergent Community Reactions

Aside from strong criticism from the Indian opposition party, WazirX CEO Nischal Shetty stated in a CoinDesk interview here:

This proposal is more harmful than beneficial to the government or India's crypto ecosystem and may reduce the participation of Indian exchanges, leading to capital outflows.

However, former Coinbase CTO Balaji Srinivasan believes that this is a significant victory for the legalization of digital assets in India. He praised the technical acumen of the Indian Finance Minister and expressed great optimism about India's future development, suggesting that India's upward trend will intersect with America's decline:

After watching the video, you will find that India is more technologically savvy than commonly believed, with initiatives like digital universities, drone farms, remote healthcare, and open-source projects. As a political figure, seeing her calmly explain how technology benefits the country in a boring budget speech feels strange, as Vice President of Founders Fund Mike Solana said, "The US government knows what they want to destroy, but they don't know what they want to build."

Balaji Srinivasan emphasizes that India is destined to be a crucial part of the world in 2030.