Future of Cryptocurrencies in India: Should You Invest Now?

Cryptocurrencies are in the news every other day. The market of digital assets is extremely volatile, and can not be regulated easily. The transactions done for buying and selling cryptocurrencies and digital assets in India is hard to trace, didn’t come under any government financial regulations, and was not monitored. This made cryptocurrencies in India very popular among the youth. The Annual Budget of 2022 brought in a number of policies and regulations regarding digital assets and currencies. These regulations are important to know and understand before deciding to invest in them or not. The hype around NFTs has brought in a number of new investors in the digital currency and assets scene. In this article, we will discuss the future of cryptocurrencies in India. Is it legal? Does it come under the Tax bucket? We will clear all your doubts.

Regulations on NFTs and Cryptocurrencies in India

In the Annual Budget, 2022, Union Finance Minister announced a number of regulations on holding and trading of digital assets and cryptocurrencies in India. To start with, the government will charge a 30% tax on the transaction of cryptocurrencies or digital assets. This means that any withdrawal subjected to digital assets will be charged with a 30% tax. The tax bracket is the same as that of profits earned from gambling or lottery. Before the budget on February 1, 2022, these digital assets were not taxed (they are not even taxed now, but will fall into it from FY 2022-23), nor were they recognized as a viable option for a transaction by the govt.

Credits- Forbes

The tax charges are not subjected to any profits, so even if you are taking money out in the form of loss, the 30% tax will not be exempted. The government will not take any liability for the losses incurred on digital assets. A proposal to provide for TDS on payment made in relation to the transfer of virtual digital assets at the rate of 1% of such consideration above a monetary threshold was also presented. The gifting of digital assets will be taxed, to be paid by the recipient.

Introduction of Digital Rupee

The 2022 budget also came in with the announcement of the digital rupee. This move is said to be a step towards making India cashless, or less dependent on cash. India is one of the few countries to introduce a digital currency based on Blockchain technology. Even USA has not been ventured into this technology. The digital currency will be issued and regulated by the Reserve Bank of India.

Should You Invest in Digital Assets and Cryptocurrencies in India?

The marketplace for digital assets has always been volatile. The returns and the earnings were not certain since the very beginning, but it was unregulated and interest-free. Now that the Government of India has levied taxes on the transactions, it might not be everyone’s cup of tea. This does not mean that it is not a means of smart investment. The risks are always high, and returns are not guaranteed.

The market has been uncertain, and it will continue to be like that. However, investing is a personal choice. To stay up to date with upcoming events and tech news, keep an eye on Techburner.