The country is planning to tax profits from trading digital assets at 30% — one of the highest rates worldwide.
Speaking in parliament, finance minister Nirmala Sitharaman also confirmed that India plans to launch a digital rupee by 2023 — a move that's designed to boost the economy.
Noting how popular cryptocurrencies have become, with A-listers now appearing in ads for local exchanges, Sitharaman said:
"There has been a phenomenal increase in transactions in virtual digital assets. The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime."
Businesses and traders have been plagued with uncertainty ever since the Reserve Bank of India imposed a controversial ban that stopped financial institutions from facilitating crypto transactions — measures that were later thrown out by the Supreme Court.
A Growing, Bustling Market
Supporters also argue that regulation from the government, instead of an outright ban, would lead to the creation of thousands of jobs and provide an economic boost.
"Hope to see a reduction of crypto ban fear in India. Lot to unpack here but overall this is a very positive step forward for the crypto ecosystem in India."
Shetty went on to share screenshots of government documents that explain how the crypto taxation measures will work — and said the paper "doubles down on the fact that virtual assets are legal in India."
A poll that was jointly performed by Deloitte and The Times of India also suggests that a significant number of consumers are interested in gaining exposure to crypto — but have simply been waiting on the sidelines for regulatory clarity.
The survey results were released in the run-up to the budget session in parliament — and Deloitte partner Saraswathi Kasturirangan had called for "specific provisions with detailed rules on taxation of cryptocurrency."