Clearly, the taxation policy on crypto and even the government’s digital currency announcement hint at a much bigger picture. While the taxes being levied and their impact needs to be thoroughly researched before any substantial remarks can be made, the budget 2022 offers the following five key insights:
The inclusion of crypto assets in the taxation mechanism has given the industry the much-awaited recognition that it deserved. As a result, it has positively shaped the perception of potential crypto investors who were uncertain about its legal position in India. Investors who’ve been Interested but sat on the sidelines can finally participate in crypto now with its acceptance as a virtual asset class.
Likewise, the tax announcement brings trust and stability to the Indian crypto industry as we all gear up to embrace its innovation across all sectors. Mainstreaming this growing virtual asset class also delivers diversity to our overall investment portfolio and hedge as per risk-taking capacity.
An essential aspect of the taxation framework is that the government is receptive to the changing face of investing in the country. The introduction of tax policies is a significant step to show the government’s interest in understanding this alternative asset class, its use cases, and the impact as an industry to build the necessary Cryptotech infrastructure in India.
Importantly, this budding industry will now rebuild and expand, adhering to the legal framework laid out by the government of India. The success of this lies in meaningful discussions between the industry bodies and policymakers to further improve the crypto investor conditions in India.
The expansion of the crypto industry has been phenomenal. In India, the sector is set to become a billion-dollar industry in just a few years and perhaps even earlier, should the market expand. This is a clear indicator of the potential impact that the crypto market can have on the country’s GDP, and this taxation move reflects a frankly visionary stance of the Indian government.
Not only this, the contribution of cryptos towards India’s GDP will set the stage for more robust taxation and legal frameworks, where the industry can grow unchallenged and deliver revenue for the nation.
Cryptos might witness the same preference and fervor enjoyed by the equity market. Although there is still a little ambiguity surrounding the legal cap of the industry, the inclusion of taxes is a welcoming step to attract severe and traditional investors. And both the sector and the investors needed this kind of trust of the vote only.
The shift of traditional investors to the sector will entice small investors to follow suit, undoubtedly expanding the industry. Similarly, the veterans in the crypto sector can invest without the prior fear of an unwanted legal repercussion.
Due to the RBI stance, the banking sector has always been non-committal to the crypto industry. However, the budget has flipped this scenario and could invite the banks to come forward in a symbiotic relationship with the industry. As a result, both the crypto industry and banks can reach millions of consumers together and engage in the greater good – adopting the world’s best-performing asset class.
This is just the beginning.
The announcement of the tax regime is just the beginning of a new chapter of crypto in the Indian economy. The government is currently testing waters, and multiple likewise laws and regulations will follow closely. However, the crypto industry is reshaping itself to become a more secure and accessible market under legal guidelines.
First Published: IST