Despite the fact that the blockchain and crypto industries have made significant progress in reinventing innovation, society, and economic growth in nations such as the United States and China, India has yet to fully realise the technology’s promise.
According to reports from 2021, India is one of the leading countries in terms of cryptocurrency adoption. Indian investors have been investing in digital currencies at an exponential rate for years, since their creation. They value them so highly that they regard them as digital gold.
In the Winter Session of the Parliament in 2021, the Indian government sought to control the crypto sector, but the session ended without a final resolution on the crypto bill. The Indian crypto community now anticipates some clarity in the 2022 Union Budget session.
The cryptocurrency community is on a knife’s edge, waiting for the government to clarify whether or not the Parliament’s decision will be favourable to the business. Experts and market leaders anticipate the proclamation of some clear regulations in this era of digitalization.
“The Indian crypto market is thriving and has seen tremendous growth over the last few years, necessitating the long-awaited industry recognition.” While we await the official introduction of the crypto bill, we are hoping that the government will assist in its implementation,” said Abhinav Soomaney.
He also said that taxing cryptocurrency investments as an asset class would be the most practical solution for the Indian government, with tokens being taxed as STCG if sold within three years of the holding term, and LTCG if not. NFT transactions should also be classified as an asset class, as this will provide investors with more information.
For NFT makers, it can be considered as a regular business with a timely P&L to record and expense COGS or any other business-related expenses associated with developing and selling the NFT.
Defi loans, swaps, and staking incentives, he claims, should be seen as the bank’s FD rather than transactions. Investors will only be taxed on the interest obtained in exchange for using third-party software to block their funds. Because the investor is technically selling a pre-owned asset to buy another asset, coin-to-coin exchanges like selling BTC to buy ETH should be recognised as taxable transactions.
He also advised that the government trace the transfer of coins from one wallet to another to prevent tax avoidance. This can be accomplished by requiring on-chain exchanges like WazirX to disclose transfers of more than INR 5 lakhs per investor in a tax year.
The blockchain and crypto revolutions have had a significant impact on the worldwide financial and economic landscape. El Salvador, for example, has already set a high bar by embracing volatile cryptocurrencies like Bitcoin as legal cash.
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