Sidharth Sogani
When the finance minister started speaking about cryptocurrencies, there was an acceptance that there was a phenomenal increase in the transaction volumes. And she quickly followed it up with the expression that a scheme was needed to tax them. This was clearly, a positive sign because that would provide clarity to the investors and multiple stakeholders in the ecosystem. In addition, it was also, presumably, an indication of things to come in the much-awaited Bill in the monsoon season. Interestingly, in the Budget papers too, cryptocurrencies have been mentioned as virtual digital assets, indicating that the proposed Bill will consider it as an asset or a commodity and not as a currency or legal fiat.
Heavy taxation
But then, came the body blow – a straight 30 percent flat tax rate was proposed. And not only that but the number of other conditions that were included in it. There are many implications of this flat tax rate. For one, irrespective of the income slab, one will have to pay 30 percent on all the gains from cryptocurrencies/virtual currencies, as one calls it. What is important here to consider is that a tax like this, encompassing all taxpayers, seems quite impractical. Simply because the majority of the population does not pay any tax. They come under the tax-free slab or pay rates of 10 percent or 20 percent. In other words, the Union Budget is making cryptocurrencies unviable, as well as unattractive for the middle class, who wish to make some extra money by taking that extra bit of risk.
Also read: Explained: How cryptocurrencies will be taxed after Budget 2022
In addition, the high rate of taxation ensures that only the upper-middle-class or the rich can take this risk. Globally, things are
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