The Indian government has announced that cryptocurrencies will soon be taxed in the country. The measures will come into effect soon, but there is still a big problem: cryptos are still not legal in the country.
In India, cryptocurrencies will be taxed from April 1, 2022 – even if they are not yet officially legal. This is what Nirmala Sitharaman, India’s finance minister, said on February 21, the date of the signing of the new Indian budget law: I don’t intend to wait for crypto currencies to be regulated to tax people who make a profit from them †
The details of the law
The new Indian budget law specifies several things, but the most important is this: all profits related to the sale of crypto assets will be taxed at a flat rate of 30%. The government also announced a 1% withholding tax on all crypto transactions. Since March 21, the Indian authorities have also clarified that profits from the sale of crypto assets should not be considered ” financial services “, but are considered ” lottery winnings †
Aside from the lottery aspect, this flat-rate tax is reminiscent of the one in France: ” capital gains from the sale of digital assets, bitcoins or other crypto-currencies are taxed at a general rate of 30% But unlike France, where cryptocurrencies are allowed, there is not yet a precise legal framework in India, as evidenced by the government’s hesitation in finding the right tax category for crypto assets.
For now, it is not so much the taxes that are of concern to the crypto community in India, but rather the issue of legality. As soon as the new Indian budget law was announced, the exchange platform Binance tweeted thus Which ” crypto had just become legal in india However, the reality is far from that simple. Jagannath Bidyadhar Mohapatra, the head of the Indian tax authorities, confirmed to CoinDesk that this new rule “ did not change bitcoin’s legal status, which will be defined when the digital asset regulation law is passed by parliament For now, crypto is therefore not legal – although the sale, purchase and exchange of cryptocurrencies are not strictly prohibited in the country.
The problem, for the Indian crypto community, remains that the content of the said regulatory law is still unclear. According to CoinDesk, the account has evolved a lot in just a few months. One of the concepts would have called for a complete ban on all private cryptocurrencies, while the current concept would allow their use as financial assets. In any case, the law is still unclear and subject to change.
There is also no date for the presentation of the law to the House of Representatives and the Minister of Finance refuses to give an estimate. The situation may therefore remain undetermined for some time. The only certainty for now is the e-rupee, the digital currency that will be issued by the Indian central bank.
The digital rupee will be launched in 2022 and will become an official currency in the country. It is not a cryptocurrency, so a digital asset regulation law would not affect the e-rupee. But its arrival is significant, as governments have historically preferred to promote their digital currencies over cryptocurrencies. And this has often led to stricter legislation: this was particularly the case in China, which banned mining of cryptocurrencies before the introduction of its e-yuan, and this could be the case in Russia. , that the advent of digital sin rubles. For the Indian crypto community, this could mean that uncertainty about their legality could continue for some time to come.