Digital assets such as cryptocurrency and their legal status in India were the most awaited announcements in the Union Budget 2022-23. The bill has evolved from a complete prohibition to a governed asset. The Finance Minister presented a modern and forward-thinking budget, emphasizing India’s focus on digital innovation and the promotion of blockchain technology. It touched on several crucial issues that will aid the industry in achieving long-term growth.
Though the Budget does not make crypto legal, it does offer these digital assets some governmental status, giving the sector the required legitimacy. So, in essence, cryptocurrency has no restrictions, thereby serving its function, and is also widely recognized by the government as a legitimate operation. However, they are considered to be in legal obscurity and will only get completely legalized if full-fledged cryptocurrency legislation gets passed.
A Toast to Validation
The dread of a crypto ban in India has evaporated after nearly five years of uncertainty. A
few months ago, the crypto market was experiencing panic selling. Taxation established crypto as a legitimate digital asset, giving it legitimacy and making it more ethical.
However, having a 30% tax rate on earned income is a concern for traders, as it will further restrict liquidity. Taxation applies to virtual currency gifts as well, with the recipient bearing the burden of any deductions.
According to the Finance Minister, all crypto transfers exceeding a particular monetary threshold would be subject to a 1% TDS deduction, allowing the authorities to follow their movement in the economy. To an extent, the government’s progressive approach has justified the sector. It is also establishing a blockchain-powered digital currency, the Digital Rupee, which will be regulated by the Reserve Bank of India.
India is ranked second in the Global Crypto Adoption Index, with 42 per cent of crypto transactions totaling more than $10 million being large and institutional. India’s determination to construct a liberal, technology-driven economy has been fueled in the Budget. The adoption of cryptocurrencies is a significant step forward.
As an industry, and in light of the government’s recognition, we can assert that the crypto sector has enormous potential to create jobs and contribute to India’s $5 trillion GDP vision. Crypto has the potential to boost our GDP significantly! It is simply the start, not the finish line. A lot of good things are conceivable and on the way from here.