The Union Budget 2022 take-aways

RBI to launch digital rupee using blockchain technology; income from crypto gain to be taxed at 30%

Indian Finance Minister, Nirmala Sitharaman presented her 4th Union Budget today, on 1st February 2022.

The 2022–23 Union Budget focused mainly on four key areas causing a major push in the Education and Finance sector. The country’s crypto investors were waiting for clarity from the government on recognizing digital virtual assets like bitcoin as legal tender. The finance minister made a big announcement in her budget speech for 2022–23 around crypto.

“Moving forward on this parallel track, we lay the following four priorities — PM Gati Shakti, inclusive development, productivity enhancement and investment, sunrise opportunities, energy transition and climate action,” FM said.

Investment section of the budget

Budget 2022 has offered more light to the grey area of the crypto space. The Indian government has taken a standpoint that it would treat crypto products as assets and not as currency. It is now very obvious that any kind of crypto products’ transfer from one person to another would be taxable. When it comes to such transfer of assets, including the sale of crypto, income taxes would be levied. This stand of the Budget will be applicable for all sorts of Digital Assets and NFT’s.

RBI to introduce digital currency from 2022

After much patience and waiting, the Finance Minister has proposed to introduce a digital rupee using blockchain technology. The same proposal to introduce a digital rupee by the central bank was also brought up earlier both by the government and the Reserved Bank of India.

“Digital currency will also lead to a more efficient and cheaper currency management system. It is therefore proposed to introduce digital rupee using blockchain and other technology to be issued by the Reserve Bank of India starting, 2022 and 2023,” FM

It is evident from the Finance Minister that the use of blockchain technology in the monetary system is efficient and cheaper and therefore the government has recognized the need to introduce blockchain technology. The proposal to introduce CBDC by the RBI is a welcome move from the industry as this will catalyze the growth and would help bring crypto to the mainstream. It is a way forward, given the digitization agenda that the country has concerning financial transactions. Using blockchain technology for the same provides better transparency and accountability.

Crypto gain to be a taxable income

While the previous stand of RBI was to ban private cryptocurrencies, today the Finance Minister made it clear that any income from the transfer of virtual assets will be taxed at 30%. This implies that the government is looking to regulate the industry rather than banning it.

“I propose to provide that any income from transfer of any virtual digital asset shall be taxed at the rate of 30%. No deduction in respect of any expenditure or allowance shall be allowed while computing such income, except the cost of acquisition,” FM Nirmala Sitharaman

While the proposed standard tax is quite high, explicit taxation would legitimise the industry. This clarity was the need of the hour and hence, now the traders could plan their trades accordingly. The proposed TDS as well makes sure the trades are accounted for monthly even though it hampers the intraday traders to some extent.

What’s more

  • 30% taxes applicable on profits from trading in crypto

Profits made at the sale of crypto or NFTs will be taxable at 30% tax without any deductions or exemptions. It would no longer be considered as Short Term or Long Term Capital Gains. There are also no minimum profits provided for exemption. No matter how small the profit is, it will be taxable under the 30% slab.

  • 1% TDS to record and monitor transactions

All the crypto transactions will be taxed at 1% as TDS. This would be the government’s approach to monitor all transactions happening in the crypto space. This approach might prove to be slightly drastic for intra-day traders as they buy and sell on the same day and do numerous such transactions. The same traders will also be liable to pay 30% taxes on profit as well. This will also affect the volume of transactions happening in the crypto space within India. For the days to come, it might be a bad move from the government’s side to impose such high TDS, given some investors tend to do transactions for small profits, especially for intraday traders and short term investors.

  • Gifts will be taxable as well

The gifts given to family or others were not taxable for fiat or any traditional asset, but when it comes to crypto, the crypto gifts will be considered for taxes and the recipient will be liable for taxes. It is unclear as to if the recipient should pay taxes considering the acquisition cost of those assets or if the entire amount becomes taxable.

  • The losses of crypto trading cannot be offset by profits from other sources or the other way around.

The profits earned through crypto will be taxable without any exemption, but in case of loss in crypto, such losses cannot be offset through profits from other sources and vice versa. The losses in trading from crypto cannot be carried forward as well to the next financial year to be exempted from profits earned in the next year.

To make it more simple to understand the new tax rules, let’s take a look at the below example.

So far, it was falling in the same income tax slab of taxation starting from the income of 5 Lacs p.a. Because if a person’s income is 4.5 Lakhs, and the profits they made out of crypto is 60k, the total taxable income would be 5.1 Lacs and it would be as per income tax slabs.

But with the new tax regime in place, the 60k profit from crypto would get taxed directly at 30% followed by the normal slab-based taxes for the person’s income of 4.5 Lakhs.

There are multiple factors and very minute details accounting for these calculations that need to be considered and it might be more difficult to file the taxes especially for intra-day traders. Some relief was expected from this budget, but the high TDS and high taxes of 30% might make people more cautious when they trade crypto. India is moving forward towards the regulations in the crypto space making us one of the first to have regulations. These regulations might seem a little heavy on taxpayers, but it also indicates how volatile the crypto market is. It’s high time for us to see how people react to it and it would be interesting what the future of the Indian crypto space will be like.

The move of the government today is a great step to bringing crypto to the masses. While the “legality” status of crypto assets may still be in question, the progress can be seen through the government recognizing the crypto assets’ class. Thus, the budget 2022–23 has given a big push to the industry.

Sathvik Vishwanath

Co-Founder and CEO

Unocoin

Happy Birthday my darling!

Dear,

Happy Birthday my darling.

I remember that day as if it was yesterday when a friend of mine introduced me to you and I accepted you as my adopted daughter. Just a 3-year-old sapling with no idea about the world around it, lost in its own world, connected with thousands yet a secret. Over time, the more I came to know about you, the more my curiosity increased and I sometimes still think I don’t know you fully.

The father you were born to, was anonymous, yet he created history. For his own reasons, he let you go to be taken care of by everyone who wants to embrace you. Given how unique you are, who would not shelter you or help you grow? The day you came into my life, I decided to give you a home and help you grow. I did not have any examples to make people connect to you — you are so much one of a kind. I fought the whole society and made them accept you for what you are and made them understand your importance in my life, their lives. Through the years it took some time, but finally, you made yourself shine in this dark world. You faced hundreds of different problems, and faced them so bravely and never gave up.

For a couple of years, when you were kidnapped from me, I was scared to death that I lost you forever. Many people told me that I should consider you dead and I should move on but I never believed in them. I gathered all my resources and began my fight to have you back in our home, safe and sound. And like a ray of sunshine you came back to my life and that was the happiest day of my life. Since that day, I made it the purpose of my life to protect you, help you grow, and glow.

You gained your own popularity and made people fall in love with you everywhere you went. The battle is still not won. Now you are 13! You just entered your teenage which is a crucial age in anyone’s life to establish their own identity and importance, and you can no longer rest, not even intermittently. You have done something that no one has ever dared to do in the past. As time goes on, and as everyone realizes your ability, there will be more and more powerful and influential people to stop you, to kill you, or to scare your believers. By that time, I hope you will be strong and mature enough to face it and to continue supporting the common man, making him feel empowered and privileged.

My dear, no matter how much I write about you and your adventures today, you will always be your own knight in shining armor. You are at a stage where you don’t need to prove your worth and it is up to people to understand and evaluate it. In this harsh world, you have already made a name for yourself and made me proud as well.

The world needs you, it really needs you. It’s my honor today to call myself your introducer to my country and I wish you a very happy birthday my sweetheart, my bitcoin!

-Sathvik

Crypto in India — Past, Present and Future

It’s our immense pleasure to congratulate India and Indians for being a part of the future of finance globally as we just celebrated the 8th anniversary of India’s first Crypto Exchange and Trading platform, the Unocoin. India is currently the biggest market in crypto, especially Bitcoin. Currently, India holds up to 1.5 Billion dollars as crypto assets, making us the fastest growing crypto investors’ market globally.

India went through a roller coaster ride while dealing with crypto being such a volatile asset along with confusing regulations. Remember, India is among the most highly regulated countries in the world when it comes to financial transactions. Being not able to keep a track of transactions, every government had its own challenges, keeping the investors on their toes. A bill that was anticipated in the winter session of the parliament did not get presented and on the other hand, multiple ministers said that crypto is going to be regulated in India and not being banned. So the investors had a breath of relief along with the Indian Crypto trading and exchange platforms. Crypto, specifically Bitcoin made its significant debut in India in Dec of 2013, when the Indian crypto exchange, Unocoin was launched in December 2013. Let’s take a deeper look into all the challenges investors had to face from time to time, year-to-year in India, shall we? ..directly from the horse’s mouth that has seen it all!

Up to 2012- The world had seen bitcoin, its partner litecoin and a few other less serious cryptos out of which bitcoin was the King! Some used to mine bitcoin as that is the only way to obtain them in India. A few of the traders used to trade it to other coins on crypto to crypto exchanges like MtGox and Poloniex which were allowing transactions without KYC and that too for anyone and everyone around the world.

2013- Then comes the rocking year 2013! A bunch of meet-ups were being held about crypto-currency which made a lot of people curious about bitcoin. At that time, the price of Bitcoin was $417, roughly 20.6 k INR. Sounds like a dream, doesn’t it? In Dec 2013, Unocoin was launched, India’s first crypto trading and exchange platform. In 2013, iPhone 5S priced at 52k INR was also launched and in order to buy it, one had to shell out 3 bitcoin. This sounds today to a crypto enthusiast like one had to pay a fortune to get an iPhone.

It is also almost perfectly bookended by two RBI press releases on cryptocurrencies. The first, dated December 24, 2013, says:

  1. Virtual currencies are not backed by a central bank.
  2. Their value isn’t underpinned by an asset and thus a matter of speculation.

Such statements got issued 5 times in total over the next 5 years.

2014 — In the year 2014, India had approximately 8.5k investors investing in Crypto — all on Unocoin! Then comes ZebPay, another crypto exchange platform that was born in India, leading us forward to the future of finance. The price of Bitcoin was roughly $310, which is approximately 16.5k INR. In 2014, Apple launched the iPhone 6 which was roughly 62k INR. See the prices of goods and inflation doing the tango? But don’t lose your heart yet, Bitcoin will rise again. It was also the same year India successfully completed the Mars Mission.

2015- In the year, the price of bitcoin was roughly $424 which is approximately 27k INR. Wowww… Did you see that? That was the same year India saw major fluctuations in the prices of Petrol as well. The same year India’s Economic growth accelerated to 7.4%. At that time, the price of an iPhone was still around 62k INR, which indicates that the price of one iPhone was approximately 2.5 bitcoin. Hey, the people who had iPhones at that time.. are you still feeling rich?!

2016- In the year 2016, the price of bitcoin was roughly $952 which is approximately 64k INR. At this rate, bitcoin was doubling its value every year. Along with bitcoin, other cryptocurrencies were also getting popular like Ethereum, Ripple, Litecoin, etc. and the Indian Investors were getting more options to choose from and also the crypto investors community was on the rise. A few editors also mentioned that bitcoin was the best performer of the year and is ready for another bullish year.

2017- The year 2017 proved to be the beginning of the bullishness of bitcoin shooting the price all the way up to $20k which is approximately 1500k INR. The price of bitcoin was growing much more than the increase in the rate of inflation. The returns on bitcoin that year was 1600% which is insane. For 1 bitcoin you could get 14 iPhones. Everyone had their own high expectations of Bitcoin and a lot of scams started happening around the “Get Rich Quick” Scheme. The new concept of raising money through ICO got overexploited and millions of dollars were getting thrown at a simple idea or a white paper. Most of such projects never saw the time of the day. This was also the exact same year when Bitbns and CoinSwitch, the two other Indian Crypto exchanges started operating.

2018-Mar 2020- This period proved itself to be the darkest time in the history of the Indian Crypto Market. A cryptocurrency exchange named WazirX just had started. Then, RBI restricted the banks from providing services for crypto exchange and its customers in March 2018. Since then, for 2 years, Indian investors were restricted from trading in crypto as the liquidity of crypto assets to INR and vice versa were banned. Almost all exchanges were out of business as the rumours were that India will be banning crypto. Unocoin along with the IAMAI association was fighting for the rights of Indian Investors against RBI on the grounds of proportionality and affected human rights. To help restore the belief of people in crypto, a kiosk machine was also installed in Bangalore but that project was also shut down due to the misunderstanding of bureaucrats.

2020- The rising sun dawned again in the Indian crypto market when the restrictions imposed by RBI were taken off by the Supreme Court and crypto was again active in India in March 2020. By the time India could recover from the ban, the price of bitcoin rose all the way up to almost $28.6k, which is approximately 20 lacs INR crossing its all-time high from Dec 2013. This ban period turned out to be a huge miss of an opportunity for Indian Investors in the global market and India had to catch up.

2021- In the history of Bitcoin, 2021 was the most dramatic. The prices of Bitcoin went all the way from $34.6K to $68K. Now it is romancing between $48–52K. This fluctuation at such a scale resulted in multiplied growth of investors in India. Thousands of people are trading on a daily basis taking advantage of the bull that came this year. This bull also gave rise to hundreds of meme coins, some of which were short-lived. Out of these coins, many people made a lot of money while others were not so fortunate. And what is more to this happy ending? At the end of 2021, one could buy as many as 28 iPhones for one bitcoin!

Unocoin has seen it all- for being in business since 2013, Unocoin has sold bitcoins for as low as 11K INR in Jan 2015 and for as high as 55 Lakh INR in Oct 2021. So that is not a 500% increase but a 500 “times” increase in less 7 years enough to make a sensible investor scream “Scam!”.

For the new year 2022, there’s still hope that the bull run will continue and we see Bitcoin on top again breaking its all-time record of $68K, making every early investor feel victorious. Indian regulations also play a huge part in trading and exchange and in this year, may the regulations be in the favour of crypto traders and investors.

Unocoin wishes you a very happy new year and to have a great investing year ahead. May this year, the crypto market continues to boom. Nevertheless, the good old disclaimers still remain and we cannot pull “The End” card without r
eiterating them, else we would increase our followers. So here it goes: Trading and Investing in crypto assets like bitcoin are subject to various market risks. Investors should try to maintain a well-diversified portfolio of other assets along with their beloved cryptos. There is no excuse for not doing your own research before investing in crypto.

Happy New Year and Happy Holidays. “Almost the End” but ‘picture abhi baaki hai mere dost’.

What is portfolio rebalancing, and how to do it through our partner Passiv?

In this article, we’ll cover what is rebalancing and how you can easily do it using Passiv.

What Is Rebalancing?

Rebalancing is a common investing strategy used by many investors to manage risk. To manage risk, investors spread the amount of money they plan to invest across a variety of assets. This is known as diversification and, in order to rebalance, you must first have an idea of what your asset mix or allocation should be. Once you’ve determined your ideal asset allocation, you’ll want to make sure that your portfolio maintains your allocation by buying and selling assets as the market moves.

For example, you might decide that your ideal asset mix is 50% Bitcoin, 30% Ethereum and 20% Tether. However, some time passes and your portfolio’s asset mix is no longer at that 50/30/20 ratio and that Ethereum now makes up 50% of your portfolio, as opposed to your intended 30% target. To bring your portfolio back in line with your original target, you have to sell some of your Ethereum and buy some Bitcoin and Tether.

By not rebalancing, you can find yourself in a situation where you are bearing too much (or little) risk than what you’re comfortable with.

When it comes to rebalancing, some investors prefer to purchase the underweight assets in their portfolio, as opposed to selling the top-performing ones to purchase those that are underperforming. This is because these investors believe that those assets that are currently performing will continue to perform and so they’d like to maximize their profits. So they use new cash to purchase the underweight assets and bring their portfolio back in line.

Regardless of your rebalancing strategy, Unocoin has partnered with Passiv to make it easier for their clients to manage and rebalance their crypto assets.

What is Passiv?

Passiv is a portfolio management tool that makes it easy to maintain a balanced portfolio. Users can build a model portfolio allocation and Passiv does all the work to help you maintain it. By default, Passiv will display trades that will help you to bring your portfolio back in line by purchasing the underweight assets in your portfolio. If you’d like to sell your overweight assets to purchase underweight ones, you can adjust the settings to do this. With Passiv, you have more flexibility and control.

The best part is, Passiv supports both traditional and cryptocurrency assets so you can manage your entire portfolio in one convenient place.

With Passiv, you can

  • Set a target allocation for each asset in your portfolio
  • Create asset classes and set a target allocation for each of them*
  • Allocate cash and rebalance your portfolio in one-click*
  • Exclude assets from your target portfolio
  • Get notified whenever your portfolio drifts

*Available to Passiv Elite subscribers only.

As part of the integration, we’re giving you access to Passiv’s Elite tier for free for one year. Simply click here, sign up, and upgrade to Elite via the settings page.

Is India about to miss the bus in leveraging cryptocurrency?

The advanced currency has opened up avenues for international transactions and democratised the currency.

Despite the uncertainty over the future of cryptocurrency in India, as the nation awaits the unveiling of the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, in Parliament, the appetite for blockchain technology and cryptocurrency, in particular, among Indians appears to be fascinating.

Even if the broad consensus goes in favour of banning private cryptocurrency India, perhaps it won’t prevent users from dealing in it. The reasons for the recognition to cryptos and the massive investor response to this asset class are manifold: failed government policies, disillusionment with the banking system and unfair distribution of IT returns.

So why is crypto gaining popularity in India in recent years? One of the key factors is traditional Indian reverence for gold to save, and with increasing tech-savviness, crypto is emerging as a kind of digital gold. The advanced currency has opened up avenues for international transactions and democratised the currency.

Crypto is Probably the Best Solution for Many Things Going Wrong in the Nation
Even the world’s richest man, Elon Musk, has added #bitcoin to his Twitter bio and tweeted — “In retrospect, it was inevitable.”

There is huge potential that India can gain when bitcoin and blockchain go mainstream, and it is not restricted within the strict regulatory ambit. How can the country gain by championing decentralised cryptocurrencies? It can help safeguard national security, deter financial frauds, strengthen monetary policy, attract international capital, accelerate technological development and drive the nation towards becoming a global power.

Moreover, as blocks run on a peer-to-peer network, it helps keep corruption in check by tracking the flow of funds and transactions. Political arrogance and sales without invoices in our country are one of the biggest vices. This leads to creation of black money and a huge loss of revenue to the exchequer. The automated blockchain-based token system can be a great solution for these challenges the nation has been facing.

Further, India is one of the biggest inward remitters from many foreign nations, and there is expected to be a massive boom in remote work and remittances going forward. A significant amount of such transactions is lost in transfer, and currency conversion fee. Cryptocurrencies, however, save money and substantial time for both the remitter and the receiver, as it is conducted entirely on the Internet, runs on a mechanism that involves very less transaction fees and is almost instantaneous.

Crypto is the Financial Internet: Is it Wise to Distance from this Development?
Blockchains are about transferring value, as it enables a financial Internet that is digitizing commodities, currencies, stocks, real estate, bonds and every imaginable type of financial instrument. If we do not move in pace with the innovation, it would prevent all of that advancements and growth from happening in India. It is like banning the Internet or smartphones when they were launched. Can you imagine your life without the Internet and smartphones today?

Crypto can also reignite the entrepreneurial wave in India’s startup ecosystem and create job opportunities across different levels, from blockchain developers to designers, project managers, business analysts, promoters and marketers. Its greater adoption will also attract institutional investors to the promising world of cryptocurrencies. Furthermore, with crypto by her side, the country can bank the massive unbanked population. This is because cryptocurrency runs on a decentralised grid.

Summing Up!
According to Coindesk, the total value of all cryptocurrencies is over $1.5 trillion and it is growing at a rapid pace from a total market capitalisation of just above $760 billion in late 2017. While crypto has the potential to strengthen the economy, national security, technology, currency & foreign policy, India has the talent to pull this off. A move by the country in favour of cryptos would attract global attention and support from the world’s financiers and technologists can put the country on the forefront of the rapidly evolving industry.

This article appeared first on Economic Times on 19 Feb 2021 through the link https://economictimes.indiatimes.com/markets/stocks/news/is-india-about-to-miss-the-bus-in-leveraging-cryptocurrency/articleshow/81107495.cms