Levies 30% Tax on Cryptocurrencies.
India is about to launch a digital version of the rupee and impose a 30% tax on virtual currencies. That's what Indian Finance Minister Nirmala Sitharaman announced on Tuesday while presenting the country's annual budget. The digital rupee is expected to launch sometime in the new fiscal year, no earlier than April.
Minister Sitharaman clarified that the digital rupee would not be a decentralized currency such as bitcoin, but will be controlled by the Reserve Bank of India. She also expressed her hopes that the affordability and efficiency of the digital currency would be a big boost for the digital economy, but hasn't provided more details about the impact the digital rupee launch would have on the economy.
The announcement allayed the fears of crypto traders that virtual currencies are to be totally banned in India because they are seen as tools for money laundering and terrorism funding. The Prime Minister Narendra Modi even said that crypto payments were going to “spoil” young Indians. Now, it is clear that a complete ban is not going to be introduced, but there will be a 30% tax on crypto trading and a 1% tax deduction on payments related to the purchase of digital assets.
The decision comes after a growing interest in digital currencies and the Minister pointed the “magnitude and frequency of these transactions” as the main reason for imposing a tax regime.
India is not, by any means, the only country exploring the opportunities digital currencies would provide. China has been testing the waters with a digital yuan for two years now. The United States is also considering the launch of a digital dollar. Some European countries are also making small steps towards the legalization of digital assets.