London Daily

Focus on the big picture.
Friday, Oct 17, 2025

Legal or not? India’s budget raises questions, hopes for crypto

Legal or not? India’s budget raises questions, hopes for crypto

Narendra Modi’s government plans to launch an official digital currency and begin taxing profits on cryptos.

While the status of cryptocurrencies in India is far from clear after the country’s annual budget, investors see hopeful signs that New Delhi is tentatively moving towards greater acceptance of the digital assets.

Narendra Modi’s government said during the budget announcement on Tuesday that it will launch an official digital currency and begin taxing profits earned on cryptocurrencies from the financial year 2022-2023.

After sending crypto investors in a tailspin in November by proposing a ban on virtual currencies, New Delhi has shifted gears from prohibiting the technology to jumping on the bandwagon.

Even as Finance Minister Nirmala Sitharaman insisted cryptos could not be considered “currencies”, she unveiled a virtual currency that will be introduced by India’s central bank next year.

The central bank digital currency (CBDC), or digital rupee, will create a more “efficient and cheaper currency management system” in a country that still largely depends on cash, Sitharaman said.

Meanwhile, “virtual digital assets” will attract a flat 30-percent tax, she said.

For some industry watchers, the moves are seen as the first step towards legitimising cryptocurrencies, which are largely unregulated in India.

Gursimran Jit Oberoi, a crypto investor and author in Gurgaon, described the move to tax digital currencies as a net positive.

“I was already paying 30 percent tax on crypto profits each year under the head [category] ‘income from other sources,'” Oberoi told Al Jazeera. “So, nothing changes for me.”

New Delhi proposed a new digital currency issued and regulated by the Reserve Bank of India


Notably, the Cryptocurrency and Regulation of Official Digital Currency Bill – which could simultaneously ban private crypto operators and grant the Reserve Bank of India the authority to issue digital currencies – is not among the tentative list of 15 bills to be tabled in Parliament during the budget session.

As yet, cryptocurrencies continue to exist in legal limbo. Tax chief J B Mohapatra, in post-budget comments to the media, stressed that taxing cryptos did not give them legal status.

“The department does not sit in judgement over the legality of any transaction,” Mohapatra said. “The income tax department and the income tax act only looks at whether the transactions that you have entered into are resulting in income. We are not into legality of any income but we are into the taxing of that income.”

The 30 percent flat tax rate on cryptos is in line with how speculative income, like winning the lottery, is taxed in India. As with such winnings, crypto investors will not be able to claim deductions to reduce the tax liability.

The wording of the government’s proposal is ambiguous about whether taxes will be levied on annual net gains or each profitable sale, raising questions about tax liability when an investor makes money on a cryptocurrency then loses it shortly after, or loses money on another virtual currency.

Losses from cryptocurrencies cannot be offset against income from other sources such as real estate or salary, nor can losses be carried forward to future years. But it is unclear if profits from one type of digital asset can be offset against losses from another.

“It should be on annual net gains from all digital assets,” Harry Parikh, an associate partner at M&A Tax and Regulatory Services in Mumbai, told Al Jazeera.

The government has also introduced a provision for levying a 1 percent tax rate at source when an investor sells digital currency – with 29 percent to be paid later – to keep track of buyers and sellers.

‘Prototype of the crypto tax regime’


Parikh said the current proposal reads like a “prototype of the crypto tax regime” and that it would become clearer in the coming months.

“The implementation is difficult as buyers cannot be identified readily. A lot of people will become non-compliant if the rules are not clarified,” he added.

The 30 percent tax rate is likely to be a tough pill to swallow for investors on lower incomes and could see them move to asset classes that are more tax-friendly and less risky, like mutual funds and stocks.

But Oberoi said the government’s “sort-of” validation of cryptos would encourage big investors, who are currently on the sidelines, to join the fray.

“I expect big net-worth individuals, corporates and family offices to take meaningful exposure in cryptos from the financial year 2023 onwards,” Oberoi said.

India’s officially-approved digital currency is envisaged as a digital version of its fiat currency and not intended to compete directly with cryptos such as Bitcoin.

Vaibhav Kakkar, a partner at Saraf & Partners, told Al Jazeera India may utilise the new currency for wholesale transactions or retail payments, or a combination of both.

“Wholesale CBDCs can play a significant role in easing cross-border payments, and reducing risk in interbank asset and money transfers,” Kakkar said. “Whereas retail CBDCs remove the necessity for a traditional bank intermediary and connect a consumer directly with the central bank.”

Globally, only a handful of countries – including Bahamas and Nigeria – have launched a digital currency while dozens of others are exploring the option.

“Nearly 87 countries across the world are considering launching their own CBDC and are at various stages of research. Some countries like China have begun limited pilots,” Kakkar said.

Despite the tax and other barriers, India’s proposed CBDC symbolises growing acknowledgement that virtual currencies can’t simply be ignored.

“Now that you have legitimised it, time to optimise it to avoid flight of capital to crypto-tax-friendly nations,” Oberoi said.

Newsletter

Related Articles

0:00
0:00
Close
HSBC Confronts Strategic Crossroads as NAB Seeks Only Retail Arm in Australia Exit
U.S. Chamber Sues Trump Over $100,000 H-1B Visa Fee
Shenzhen Expo Spotlights China’s Quantum Step in Semiconductor Self-Reliance
China Accelerates to the Forefront in Global Nuclear Fusion Race
Yachts, Private Jets, and a Picasso Painting: Exposed as 'One of the Largest Frauds in History'
Australia’s Wedgetail Spies Aid NATO Response as Russian MiGs Breach Estonian Airspace
McGowan Urges Chalmers to Cut Spending Over Tax Hike to Close $20 Billion Budget Gap
Victoria Orders Review of Transgender Prison Placement Amid Safety Concerns for Female Inmates
U.S. Treasury Mobilises New $20 Billion Debt Facility to Stabilise Argentina
French Business Leaders Decry Budget as Macron’s Pro-Enterprise Promise Undermined
Trump Claims Modi Pledged India Would End Russian Oil Imports Amid U.S. Tariff Pressure
Surging AI Startup Valuations Fuel Bubble Concerns Among Top Investors
Australian Punter Archie Wilson Tears Up During Nebraska Press Conference, Sparking Conversation on Male Vulnerability
Australia Confirms U.S. Access to Upgraded Submarine Shipyard Under AUKUS Deal
“Firepower” Promised for Ukraine as NATO Ministers Meet — But U.S. Tomahawks Remain Undecided
Brands Confront New Dilemma as Extremists Adopt Fashion Labels
The Sydney Sweeney and Jeans Storm: “The Outcome Surpassed Our Wildest Dreams”
Erika Kirk Delivers Moving Tribute at White House as Trump Awards Charlie Presidential Medal of Freedom
British Food Influencer ‘Big John’ Detained in Australia After Visa Dispute
ScamBodia: The Chinese Fraud Empire Shielded by Cambodia’s Ruling Elite
French PM Suspends Macron’s Pension Reform Until After 2027 in Bid to Stabilize Government
Orange, Bouygues and Free Make €17 Billion Bid for Drahi’s Altice France Telecom Assets
Dutch Government Seizes Chipmaker After U.S. Presses for Removal of Chinese CEO
Bessent Accuses China of Dragging Down Global Economy Amid New Trade Curbs
U.S. Revokes Visas of Foreign Nationals Who ‘Celebrated’ Charlie Kirk’s Assassination
AI and Cybersecurity at Forefront as GITEX Global 2025 Kicks Off in Dubai
DJI Loses Appeal to Remove Pentagon’s ‘Chinese Military Company’ Label
EU Deploys New Biometric Entry/Exit System: What Non-EU Travelers Must Know
Australian Prime Minister’s Private Number Exposed Through AI Contact Scraper
Ex-Microsoft Engineer Confirms Famous Windows XP Key Was Leaked Corporate License, Not a Hack
China’s lesson for the US: it takes more than chips to win the AI race
Australia Faces Demographic Risk as Fertility Falls to Record Low
California County Reinstates Mask Mandate in Health Facilities as Respiratory Illness Risk Rises
Israel and Hamas Agree to First Phase of Trump-Brokered Gaza Truce, Hostages to Be Freed
French Political Turmoil Elevates Marine Le Pen as Rassemblement National Poised for Power
China Unveils Sweeping Rare Earth Export Controls to Shield ‘National Security’
The Davos Set in Decline: Why the World Economic Forum’s Power Must Be Challenged
France: Less Than a Month After His Appointment, the New French Prime Minister Resigns
Hungarian Prime Minister Viktor Orbán stated that Hungary will not adopt the euro because the European Union is falling apart.
Sarah Mullally Becomes First Woman Appointed Archbishop of Canterbury
Mayor in western Germany in intensive care after stabbing
Australian government pays Deloitte nearly half a million dollars for a report built on fabricated quotes, fake citations, and AI-generated nonsense.
US Prosecutors Gained Legal Approval to Hack Telegram Servers
Macron Faces Intensifying Pressure to Resign or Trigger New Elections Amid France’s Political Turmoil
Standard Chartered Names Roberto Hoornweg as Sole Head of Corporate & Investment Banking
UK Asylum Housing Firm Faces Backlash Over £187 Million Profits and Poor Living Conditions
UK Police Crack Major Gang in Smuggling of up to 40,000 Stolen Phones to China
BYD’s UK Sales Soar Nearly Nine-Fold, Making Britain Its Biggest Market Outside China
Trump Proposes Farm Bailout from Tariff Revenues Amid Backlash from Other Industries
FIFA Accuses Malaysia of Forging Citizenship Documents, Suspends Seven Footballers
×