India to Tax Cryptocurrency Trades, Modi Cabinet to Take Up Bill Soon: Report
© REUTERS / DADO RUVICA representation of cryptocurrency Bitcoin is seen in this illustration taken August 6, 2021.
© REUTERS / DADO RUVIC
The Indian government is expected to consider a bill prohibiting all private cryptocurrencies and allowing an official digital currency to be issued by the Reserve Bank of India (RBI) very soon, as the latter had flagged serious concerns over expanding transactions in the virtual currencies.
The Indian government is looking to tax cryptocurrency trades and their ecosystem in the country, a financial news media outlet, ET Now, reported on Monday citing unnamed sources.
The tax department is in favour of taxing crypto exchanges and trades and the government feels that any activity that generates income must pay tax, according to ET Now.
Last week, RBI governor Shaktikanta Das had raised “major concerns” about cryptocurrencies.
“The central bank has conveyed its ‘serious and major concerns’ about cryptocurrencies to the government and now it will have to decide on how to deal with the proliferation of such platforms.”
On 31 May this year, the Reserve Bank of India advised that banks as well as other regulated entities may continue to carry out customer due diligence processes in line with all the regulations that are being implemented on any other financial services in the country. This suggests that any investors who are receiving income from their crypto-currency transactions (from India or overseas) will have to pay tax under the current tax laws.
In April 2018, the RBI banned banks from supporting crypto transactions after cases of fraud involving virtual currencies were reported. However, the Supreme Court of India struck down the ban in March 2020. Among the reasons cited was that cryptocurrencies were not illegal albeit unregulated in India.
The RBI, however, has not yet granted legal tender status to Bitcoin or any other cryptocurrency.
Despite repeated concerns by the RBI regarding cryptocurrencies, trading in the assets surged to $6.6 billion in May, compared with $923 million in April 2020, according to Chainalysis, a blockchain data platform which provides data, software, services, and research to government agencies, exchanges, financial institutions, and insurance and cybersecurity companies in over 60 countries.