When crypto gained phenomenal popularity in India, the Union Budget 2022 introduced a 30% tax on earnings from digital currencies and a 1% Tax Deducted at Source (TDS) on digital assets’ transfers. Read on to learn more.
Crypto today has become a widespread investing subject, particularly among young investors. If you are one of many people who invested in or are considering crypto as an asset class, the budget has clarified how these new-age assets will be taxed. After the winter bill of 2021, people began to worry about how specific clauses would work or whether GST would be imposed in the Union Budget 2022.
Union Budget 2022
India’s Finance Minister Nirmala Sitharaman declared in the Union Budget for 2022-23 that all profits from crypto trading will be subject to a 30 per cent fixed tax rate. Union Budget 2022’s mandate of a flat 30% tax on profits from crypto and other virtual digital assets has impaired Indian retail.
Since the beginning of the new financial year on 1 April 2022, the 30% crypto tax law has been in place. From 1 July 2022, the government proposed charging a 1% TDS on all crypto transfers. Sitharaman said, “Transactions in virtual crypto assets have expanded unprecedentedly.” Because of the volume and frequency of these transactions, a specific tax regime is required “.
Many experts argue that increased taxes have ultimately legalised crypto in India. Binance joyously announced on Twitter, “India has just made crypto legal! The Indian government has clarified the situation with a crypto asset tax law.”
Crypto market trends before Union Budget
India’s relationship with crypto is strange. However, if we see crypto market news before the Union Budget 2022 was presented, India’s crypto market grew 641 per cent from July 2020 to June 2021, according to a Chainalysis report, making an area covering Central and Southern Asia and Oceania the world’s fastest-growing.
The crypto market has witnessed bitcoin reach new all-time highs and massive institutional purchases from traditional firms in the last year. India has taken a step toward creating a favourable regulatory framework for its crypto exchanges, and the general public’s interest in crypto has risen dramatically. People have been interested in investing in crypto for years and have tried their luck.
Since the RBI lifted the crypto restriction in March 2020, seasoned investors have reaped the benefits. User registrations and daily trading volumes on Indian crypto exchanges increased, and the trend continued throughout 2021. Despite the initial lack of clarity concerning crypto regulation in India and the price volatility of crypto in recent months, India has the world’s highest crypto users.
Unocoin has served 2.34 M+ users and has witnessed 21.77 M + orders on its platform. In other crypto news from the last year, bitcoin, the leading crypto by market valuation in 2021, has increased by more than 50% since the beginning of the year.
Crypto market trends during Union Budget 2022
Minister of Finance Nirmala Sitharaman presented the Indian Union Budget 2022 on 1 February 2022 as her fourth budget. Looking at the movements during the Union Budget, the crypto was red at the start of 22 February. The total market capitalisation of crypto is $1.68 trillion, down 5.57 per cent from the previous year.
Such movements were observed in the crypto asset in February 2022, according to data during the Union Budget 2022:
- If we solely consider bitcoin, it fell by 4.7 per cent on 26 January and gained by 0.49 per cent on 28 January. 1 February witnessed an increase of 1.33 per cent, but 2 February saw a drop of 4.14 per cent. On the 4th and 7th of February, the additions were 9.45 per cent and 5.57 per cent, respectively.
- According to the CryptoLive report on 22 February 2022, at 8.55 AM, the price of bitcoin was INR 29,63,315, which dropped 4.35 per cent. The cost of Ethereum was INR 2,05,127, a loss of 4.81 per cent.
- Cardano was trading at INR 67.9739, losing 11.31 per cent, while Binance Coin was trading at INR 28,500.88 after decreasing 7.65 per cent.
- XRP was at INR 55.7214, down 11.16 per cent, while Polkadot was worth INR 1,286.73, down 6.91 per cent.
Crypto market trends after Union Budget 2022
Indian retail investors’ interest in crypto appears to have been significantly impacted by the Union Budget 2022‘s proposal of a flat 30 per cent tax on income from crypto and other virtual digital assets.
From February 2022 to May 2022, according to statistics, crypto was falling and soaking a lot of ups and downs. The situation worsened in May, with a decrease of 6.43 per cent on 5 May and a decline of 12.75 per cent on 9 May. On 11 May, there was a 5.13 per cent decline, but on 17 May, the situation improved somewhat and grew by 0.88 per cent.
If we look at today’s crypto news, Polygon MATIC gained 6.11 per cent in the last 24 hours (12 July 2022).
In comparison to the previous year, Ethereum has underperformed this year. July 2022 witnessed an even weaker drop, with Ethereum dropping to USD 1,066 from its USD 4,812 h of November 2021. Due to surprising trends, new investors have been suspicious about their crypto assets this year. However, the pro investors see this as an opportunity to try out new currencies, altcoins, other cryptos, stablecoins and meme coins.
After the Union Budget 2022, the crypto trends have seen much volatility. The tax has dispirited only those Indian investors who have never seen a bear run. However, people are happy that the government is now considering the crypto asset and making decisions. The seasoned investors see the dips as a new opportunity to diversify their portfolios and try unexplored and underrated digital assets. People expect that crypto will become legal in India in the coming days.
Unocoin is India’s first entrant in the crypto space, founded in 2013. Unocoin provides a secure and simple platform to trade, store securely, and use bitcoin. Unocoin offers a fantastic blend of customer-centric support and user-friendly features on its platform. It understands the relationship between crypto trading concepts and users’ issues. Hence it acts as a perfect bridge to help the Indians understand how to use and trade in bitcoin and other digital assets.