The government in India is planning to tax cryptocurrency exchanges and trades, The Economic Times reported on Monday (Sept.13), citing sources. The cabinet is likely to discuss the bill on the proposed regulation “soon,” according to the report.
Chairman of India’s Parliamentary Standing Committee on Finance Jayant Sinha on Wednesday (Sept.8) stressed that the country will take a stance on cryptocurrencies like the ones taken by the United States, Japan, or El Salvador. The later became the first country to adopt Bitcoin as legal tender.
“Our solution will have to be distinct and unique simply because of our unique circumstances. We have to balance stability and growth but we recognize how important this whole area of crypto is,” Sinha said, as the nation still doesn’t have a full capital account convertibility.
Speaking at HODL – 2021, a crypto asset conference organized by the Blockchain and Crypto Assets Council (BACC) of the Internet and Mobile Association of India (IAMAI)- Sinha also underlined that upholding national security will be India’s top priority when talking about cryptos.
“We have to be very watchful about what happens to these crypto assets and cryptocurrencies. Use of these kind of crypto instruments in terror financing and for domestic security threats is something we want to be mindful of” Sinha explained.
A day earlier, former Reserve Bank of India Governor, Rama Subramaniam Gandhi said that once cryptocurrencies gain acceptance, they must be regulated as an asset or commodity and the same rules that govern commodity exchanges could apply.
In January 2021, India’s government meted out a bill to ban all private cryptocurrencies such as bitcoin and create a digital version of the Indian Rupee, overseen by the Reserve Bank of India (RBI). India is not alone: 81 countries (representing over 90% of global GDP) are now exploring a Central Bank Digital Currency (CBDC), according to Atlantic Council. For comparison, in the think tank’s original report published in May 2020, only 35 countries were considering a CBDC.
In early February 2021, India’s Minister of State for Finance, Anurag Singh Thakur claimed that the government finds Bitcoin and other crypto-based payments systems illegal.
“It was announced in the Budget Speech of year 2018-19 that the government does not consider cryptocurrencies legal tender or coins and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system” Financial Express quoted him as saying.
The RBI temporarily banned crypto transactions after a string of fraudulent activity in 2018. In March 2020, the Supreme Court ended the 2018 ban.
The government is now on the verge of finalizing regulations for virtual assets.
The bill on cryptocurrency is awaiting cabinet approval and is expected to be tabled in the next session of the Parliament.
All eyes are on how the government will define cryptocurrencies in the bill and how will gains be treated for taxation.
Cryptocurrency is surging in popularity in India, the world’s fifth-largest economy, with a GDP of nearly $2.9 trillion.
The world’s top 10 crypto countries according to Statista Global Consumer Survey, are: Nigeria: 32%, Vietnam: 21%, Philippines: 20%, Turkey: 16%, Peru: 16%, Switzerland: 11%, India: 9%, China: 7%, U.S.: 6%, Germany: 5%, Japan: 4%.