What's Crypto's Current Status In India? Answers To All FAQs On Digital Currency Amid Trump's Victory

New Delhi: Donald Trump's victory in the US election has led to a crypto frenzy across the globe with Indian markets also lapping up to it. The US President-elect is also vying to make America the "crypto capital of the planet". The current trends has also fueled hope that the US might even see a day where the federal reserves could even hold a part of its reserves in cryptocurrencies. The surge has been tremendous in the crypto market since the US election results were declared. Bitcoin, one of the most commonly traded crypto was trading close to $90,000 on Tuesday.

What's The Status Of Cryptocurrency In India? Crypto does not have legal standing in India and is not regulated by any authority as a payment medium. Though it's not banned here, investors are at risk if they want to trade in it as there is no law to decide on any dispute arising out of the transaction. When Finance Minister Nirmala Sitharaman proposed taxing digital assets, the whole debate around the legality of cryptocurrency in India took off. While there is an argument that the decision to tax virtual currencies could be a step toward formal recognition, the Indian government has yet to provide an official stance on whether cryptocurrencies like Bitcoin are legal. Although statements from the Reserve Bank of India Governor and various government officials, including the Finance Minister, suggest that cryptocurrency is effectively illegal, no specific ban has been implemented. However, the Union Budget 2022 introduced a 30% tax on gains from cryptocurrencies, along with a 1% tax deducted at source. Modi Govt Introduced Tax Regime For Virtual or Digital Assets In 2022Earlier, the Income Tax Act or Goods and Services Tax (GST) did not define cryptocurrencies in India. In the budget 2022, FM Sitharaman introduced a tax regime for virtual or digital assets, including cryptocurrencies.

• Cryptocurrency investors must report the calculated profits and losses as a part of their income.
• A 30% tax will be charged on the earnings from the transfer of digital assets, including cryptocurrencies, NFTs, etc.
• Earnings from the transfer of virtual assets will be reported only at the cost of acquisition; no deduction will be permitted.
• If the buyer’s payment exceeds the threshold limit, a 1% tax deduction is deducted at source (TDS).
• If cryptocurrency is received as a gift or transferred, it is taxed on the giftee’s end.
• If you face any loss from the virtual asset investment, it cannot be balanced against other income.

Road Ahead For Cryptocurrencies In IndiaThe unregulated crypto can pose a risk to investors, therefore, bringing a legislation on the issue seems to be the need of the hour, experts believe. The government took a significant step toward regulating cryptocurrency with the introduction of the Cryptocurrency Bill in 2021. The bill aims to establish a framework for creating an official digital currency issued by the Reserve Bank of India (RBI). It also proposes to ban all private cryptocurrencies, with certain exceptions, in order to foster the development of blockchain and other underlying technologies.