‘Tax on digital assets positive step for crypto industry’

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The announcement in the Union Budget 2022-23 of introducing flat 30 percent taxation on income from crypto and digital assets is being seen as a welcome move for innovators and experts working in this field.

In her speech, Finance Minister Nirmala Sitharaman said, “There has been a phenomenal increase in transactions in virtual digital assets. The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime. I propose to provide that any income from transfer of any virtual digital asset shall be taxed at the rate of 30 percent.”

However, the point to note here is that regulation on the use of cryptocurrencies is still being awaited.

“Virtual legalization of crypto and NFTs and launch of digital currency will bring in, potentially, tens of billions of investments within the next few years. The taxation announcement shows that if the holding of digital assets is allowed, trading will also be allowed. It’s as good as terming them legal while still keeping them not legal tender,” says Pallav Bajjuri, founder of Hyderabad startup Kahaniya.

Another Hyderabad-based startup Chitmonks’ founder Pavan Adipuram is also of the opinion that a 30 percent flat tax for transfer of digital assets means that the government is open for crypto as well. “More clarity is required in making cryptos legal so as to encourage this segment,” he adds.

“A 30 percent tax is indicative that the assets are not going to be banned. The digital currency by RBI will attract more builders/developers into the crypto ecosystem. They no longer have to worry if they built a game or an app using an existing distributed ledger, it’ll be banned,” says Abhilash Inumella, co-founder, QuestBook.

“It gives relief to a lot of investors that the government is recognizing the crypto-asset ecosystem and has taken efforts to give clarity on its taxation. This legitimizes the crypto asset in the country and paves way for a formal umbrella of regulations,” Vikram Subburaj, CEO, Giottus Crypto Exchange.

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