Recognition of cryptocurrencies as assets and issuance of epassports provide positive indicators for Indians abroad
BY KUMUD DAS: The writer is a Mumbai-based senior business journalist
People from various walks of life from India and abroad harbour high expectations from the annual Union Budget. And the Budget for financial year 2022-23, presented by Finance Minister Nirmala Sitharaman on February 1, has certainly brought cheer to NRIs in many respects.
Let’s begin with the cryptocurrencies. Imposing a 30 percent tax rate on gains makes crypto trading official now, and puts paid to any concerns over an impending ban. Of course, it comes with a rider. Finance Secretary T.V. Somanathan has clarified that, like gold and diamonds, private cryptocurrencies, unlike the digital rupee which will be rolled out in the next fiscal year, will never be treated as legal tender in this country.
Notably in the last few years, Bitcoin has exploded in popularity in India, which has one of the largest markets for digital tokens, with over 10 crore cryptocurrency investors. The government has proposed a 30 percent tax on income from transfer of virtual digital assets like cryptocurrencies. This constitutes a big relief for investors and traders of cryptocurrencies as clarity on taxation of cryptocurrencies was a long-
pending demand of the crypto trading community in the country.
Avinash Shekhar, CEO, ZebPay, says, “The 30 percent tax on income from virtual digital assets, while high, is a positive step as it legitimises crypto and hints at an optimistic sentiment towards further acceptance of crypto and NFTs across stakeholders in the country.”
NFTs (non-fungible tokens), which have become a craze among NRIs, are traded only in virtual currencies. However, the finance minister has made it clear that no set-off will be allowed in case of losses. Also, gifts in virtual digital assets will be taxed in the hands of the recipient.
Moreover, she has proposed that no deduction will be allowed on these gains. A tax deducted at source (TDS) of 1 percent will also be levied on payment made for transfer, above a monetary threshold.
The industry was expecting it to be treated akin to winnings from lotteries, game shows, puzzle games and similar things.
Crypto players, at large, are not bothered with high tax rates on this new age investment. They are very keen for crypto to be classified as a legal asset, with detailed provisions about TDS and tax collected at source (TCS). Analysts feel that the recognition of crypto in the Budget is a step in that direction. Amit Gupta, MD, SAG Infotech, feels that the 30 percent tax on digital asset transfer is a bargain; however,
no deduction is projected on the computing while loss cannot be set off against other income. Also, the introduction of 1 percent TDS is to be seen on transfers. All in all, he says, it is a great step forward to making digital currency a well-established form of payment and to strengthen the technology based on it.
Stakeholders are now awaiting the Central Bank Digital Currency (CBDC), which is likely to be rolled out in April 2022. It has to be seen what shape CBDC will take.
In another major development, the government will roll out epassports in FY22-23. This is likely to provide huge relief to NRIs. It had already been indicated as being in the offing by External Affairs Secretary Sanjay Bhattacharyya some time ago when he said that India could soon start issuing epassports that will use radio-frequency identification (RFID) and biometrics. He had also said that the new passports would significantly ease passage through immigration check-ins and will be compliant with the standards of the International Civil Aviation Organisation (ICAO).
While an epassport looks just like a regular passport, it comes with a small electronic chip, similar to those seen on driving licences.
The microchip is expected to store all the information that is printed in the passport, including the name, date of birth, address, parents’ names, and other details.
The electronic chip will help immigration counters to quickly verify details of travellers, reduce congestion at airports and also reduce the circulation of fake passports. The electronic passports will be scanned with a chip reader, rather than an optical reader that is used for passports at the moment.
The announcement of the rollout of epassports has been hailed by the travel and tourism industry as it is expected to help revive international travel.
@kumuddas
