In the latest proposed budget report 2022, India’s Finance Minister Nirmala Sitharaman highlighted tax liabilities for virtual assets, such as cryptocurrencies, and proposed a 30% income tax on returns from digital currencies. In simple terms, it signifies that investors would need to pay a 30% tax on their returns by trading or investing in cryptocurrencies.
Consequently, this announcement positively impacted some, but a few find such a tax amount hefty. Also, the ecosystem never appeared as transparent as it seemed post-announcement.
What Is Cryptocurrency?
Cryptocurrency is not new to us, but for the one unfamiliar with it, cryptocurrency is the digital currency secured in an encrypted form that allows secure online payments.
The future outlook for cryptocurrency is subject to debate. Still, we will put forward a few:
Merchants and retailers accepting cryptocurrencies for business and other purposes will steadily increase. Various mobile apps are working on exchanging cryptocurrencies; we can expect more ecommerce businesses to accept cryptocurrencies for trading different products, besides accepting credit and debit cards.
A workable system will be developed for consumers, investors, traditional banks, and cryptocurrency businesses.
As cryptocurrency hasn’t received any legal recognition, many countries’ governments are worried that cryptocurrency can be used illegally for human organs trafficking, arms trafficking, drug trafficking, and more. But crypto legalization will permit traceability of every transaction back to the source. This way, the investors will start trusting crypto investment, which will in turn positively impact the nation’s economy. Moreover, as cryptocurrency is based on blockchain technology, transaction histories would be unalterable and permanent.
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As digital currency is likely to be introduced soon, it can boost the digital economy. Additionally, it may also result in a cheaper and more efficient currency management system.
The announcement didn’t use the terms cryptocurrency or crypto in the budget speech. Instead, it included the phrase “virtual digital asset,” which the industry interpreted as a word for cryptocurrencies and non-fungible tokens (NFTs).
Well, the steps and naming incorporated in the speech do not imply that crypto has a legal face now. Still, the industry can witness the steps approaching towards offering cryptocurrencies legitimacy.
Well, concluding the complete announcement made by the finance minister, we can say the tax may sound hefty to some, but at least the crypto sector will soon catch up with the legitimate.
Now, we can witness the transparency in cryptocurrency, and the tax clarities would open the doors wide for money arriving in this space.
This positive step would build an appetite for the crypto blockchain and infinite innovations and employment opportunities that these technologies can facilitate in the right direction.
Moreover, this move to propose a blockchain-powered digital rupee is just out-of-the-box as it will pave a seamless pathway for crypto adoption. Here, we can expect more investment in crypto.
Furthermore, the higher tax rate would magnetize knowledgeable investors to make sound investment decisions.
As India is stepping towards legalizing cryptocurrency, it would act as a motivational push for other countries’ governments that are still not in favor of digital currencies.
We are awaiting that moment when physical and digital currency performs together and take the Indian economy to a level ahead.