With the government of India reportedly planning to prohibit the use of cryptocurrencies, crypto exchanges BuyUcoin and Bitex urge for the imposition of higher taxes instead of a total ban, according to The Economic Times on March 19.
Currently, the rates for income tax returns on various assets fall between 10 to 35%. Digital currency exchanges have put forward the imposition of 35% tax on investors’ return, as well as 28% tax on goods and services in a report by leading news platform Times Now last March 19.
However, there are no official declarations yet from the Indian government on the taxation of digital currencies.
The Reserve Bank of India has continuously expressed concern about the unfavourable effects of cryptocurrency on financial stability. In 2018, the government ordered that all transactions relating to digital currencies be shut down, including bank transactions and other regulated entities.
Moreover, the government proposed a bill entitled ‘Cryptocurrency and Regulation of Official Digital Currency Bill, 2021’ that would ban all forms of crypto transactions. However, the bill also contains plans on creating an official digital cryptocurrency to be issued by the Reserve Bank of India, as well as the promotion of blockchain technology.
In an interview on March 14 with news channel India Today Conclave South, Finance Minister Nirmala Sitharaman declared that cryptocurrency will not be completely banned in the country.
‘My view on this is that, of course, the Supreme Court has commented on cryptocurrency and while the RBI may take a call on official cryptocurrency, from our side, we are very clear that we are not shutting off all options’, Finance Minister Sitharaman stated.
She further went on to say that a Cabinet note is being prepared to provide comprehensive information on the regulation of cryptocurrency in India.
‘We want to make sure that there is a window available for all kinds of experiments which will have to take place in the crypto world. We are not closing our minds’, Finance Minister Sitharaman stated in the same interview.
In an interview last March 19, a partner at corporate law firm Khaitan & Co. Rashmi Deshpande told The Economic Times that it would be in the government’s best interest to not completely ban cryptocurrencies.
‘A complete ban on crypto assets may not be feasible given the amount of revenues being generated by businesses built in and around this technology. Further, the government may not want to lose the revenue it gets from the taxes generated by the sector,’ Deshpande said.
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