Crypto received as a gift is exempted from tax, India
The concept of cryptocurrency is not new to Indians. The first cryptocurrency was launched in the global market in 2009. While there have always been substantial investments in cryptocomebackpro.co by Indians, there has been an exponential increase in this investment model since 2020. The RBI and Supreme Court came forward with their verdict to remove any ban on cryptocurrency investment. The Honourable court directed that banning individual investments in cryptocurrency is a violation of personal rights. Today, India stands first in the overall cryptocurrency investment. There are more than 10 crore crypto investments as of today.
In addition to Bitcoin, other altcoins including Ethereum, Polka Dot, Shiba Inu, and Dogecoin have found their way in India. Additionally, there are also non-fungible tokens that have attracted investment. The hype around this model of investment has also attracted many celebrity investments and endorsements. Recently, popular actor Amitabh Bachchan created his NFT on poetry and art collection.
India and its relationship with Crypto investments
Considering the recent announcement by Union Finance Minister recently concluded budget session there is a high possibility of this investment model increasing.
But, it is also important to note that India has been following the crypto investment model for a long time now. In 2020 – 2021, the Union Finance Minister had agreed that the government is aware of crypto investments. The steering committee is being formed to carefully monitor such transaction medium to understand the pros and cons.
The 2022 budget was a clear indication of India’s stand on cryptocurrency investments. It was announced that crypto investment will be treated as property. The country imposed a 30% tax on crypto investments including capital gains. Additionally, the government also clarified that tax shall be imposed at the source for every investment made on crypto. An investor cannot nullify the capital losses and escape the taxation policy.
This announcement has come as a welcome move to many crypto investors. The government has relieved crypto investors for banning the same. Further to the announcement, the government also clarified that the central bank shall be releasing its cryptocurrency or digital currency in the year 2022. This digital currency will be developed on blockchain technology and will come under the ambit of the central bank. The overall investment in cryptocurrencies is expected to increase in the current year.
While the above move was welcoming, there are still so many questions revolving around the policy of taxation. Government is yet to clarify if the taxation will be applicable only from current investments or applicable for investment before April 2022.
How does the tax component work if crypto is gifted?
Before getting into the crypto gifting tax slab, let us understand how the tax slab works for any kind of gift in India. Gift of any kind, be it in the form of stock, jewelry, artwork or even shares attracts gift tax. The only exemption is here if the gift is exchanged between family or relatives. Cash gifts or any other coupons gifted during the marriage are exempted from this rule.
Now coming t crypto gifting the rule is more or less the same. Considering that cryptocurrency is already considered a digital asset and falls under the category of property, the same tax rule applies. There is no tax deduction at source in such cases. However, the recipient of these cryptocurrencies will be liable to pay 30% tax annually. The only exemption here is if the cryptocurrency is valued at less than 50K INR.
Post the announcement of the tax applicability, many agencies including crypto exchanges have come forward in support of this announcement. The clarity on taxation is a huge relief to long-time investors and this move has also legitimated these transactions. Major institutions who have been waiting for this move shall now come forward with their investments.
Further clarity is still awaited on how cryptocurrencies tax shall be applicable if these assets are exchanged for goods and services. The current law and rule that was put forward do not articulate how these aspects shall be dealt with. As of now, there are grey areas in this announcement. Further clarity is expected in the coming months after the launch of native digital currency.
