Cryptocurrency to be banned in India? What we know
It all began when the cryptocurrency bill was added to the Centre's legislative agenda for the Winter session of Parliament. During the winter and budget sessions, however, the bill was not introduced.
he question over the legality of cryptocurrencies in India has garnered eyeballs, especially after the government's move to tax virtual digital assets. Apart from providing clarity on taxation on virtual digital assets, Union Finance Minister Nirmala Sitharaman and top officials of the government have given statements on the future of cryptocurrency in the country.
Let's take a look at what has been said regarding the cryptocurrency.
CRYPTOCURRENCY BILL
It all started with the listing of the cryptocurrency bill in the Centre's legislative business for the Winter session of Parliament. However, the bill was not introduced in the winter and Budget sessions as the Centre aimed to hold more parleys in order to build consensus on the regulatory framework for Cryptocurrency in India.
The much-awaited bill seeks to "create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India."
The proposed bill also seeks to prohibit all private cryptocurrencies in India. However, it "allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses," according to the bill listed for introduction on the Lok Sabha website.
TAXATION ON VIRTUAL DIGITAL ASSETS
The Budget 2022-23 has proposed a 1 per cent TDS on payments towards virtual currencies beyond Rs 10,000 in a year and taxation of such gifts in the hands of the recipient. The threshold limit for TDS would be Rs 50,000 a year for specified persons, which include individuals/HUFs who are required to get their accounts audited under the I-T Act.
Also, no deduction in respect of any expenditure or allowance shall be allowed while computing income from transactions in such assets. It has also specified that losses from the transfer of virtual digital assets will not be allowed to be set off against any other income.
The provisions related to 1 per cent TDS will come into effect from July 1, 2022, while the gains will be taxed effective April 1.
CRYPTOCURRENCY TO BE BANNED IN INDIA?
Reserve Bank of India (RBI) Deputy Governor T Rabi Sankar on Monday said that banning cryptocurrencies is the most advisable choice for India as they are akin to Ponzi schemes and "may even be worse".
"Banning cryptocurrency is perhaps the most advisable choice open to India and there are strong reasons to keep cryptocurrencies away from the formal financial system," he added.
FM Sitharaman last week said the government has sovereign right to tax profit made from cryptocurrency transactions, and the decision on banning or not banning will be taken based on feedback from consultations.
Replying to the general discussion on Union Budget, the minister said, "I am not going to legalise it or ban it at this stage. Banning or not banning will come subsequently, when consultations give me input".
INVEST AT YOUR OWN RISK
RBI Governor Shaktikanta Das said cryptocurrencies are a "threat to macroeconomic and financial stability" and cautioned investors against punting on them.
Das said it is his "duty" to caution investors, and told them to keep in mind that they are investing at their own risk.
CRYPTOCURRENCY WILL NEVER BE LEGAL TENDER
Cryptocurrency will never be a legal tender, Finance Secretary T V Somanathan said.
"Crypto will never be a legal tender. Legal tender means by law it is accepted in settlement of debts. India will not be making any crypto-asset as a legal tender. Only 'Digital Rupee' of the Reserve Bank will be a legal tender in India," Somanathan said.
Thnk you.