The government will bring a law on cryptocurrencies only after a global consensus emerges regulating such assets, according to a Bloomberg report quoting sources. It said that the government is not planning a legislation soon to either regulate the cryptocurrency or tighten provisions.
As of now, legal position of cryptocurrencies is not clear as there is not law in the country to regulate them. After the Union Budget tax proposal on the cryptocurrencies, investors said the provisions have effectively legalised crypto trading. However, Finance Minister Nirmala Sitharaman has said taxing cryptocurrencies does not mean it has been legalised. The matter is still being considered.
Sitharaman has also said that the government will state its position on cryptocurrencies after completing the ongoing consultation process. In the past, the Reserve Bank of India has cautioned people against investing in cryptocurrencies. In a reference to a speculative bubble that gripped the Netherlands in the 17th Century, RBI Governor Shanktikanta Das has said that these digital assets lack the underlying value of even a tulip.
The Union Budget 2022 proposed a 30 per cent tax on profit made from the sale of all crypto assets, with a one per cent tax deducted at source on all such transactions. The new rules have become applicable from Friday (April 1). As per the new rules, no deduction will be allowed, except the cost of acquisition, and no loss in transaction will be allowed to set off the gains. A new section 115BBH has been inserted in the Income Tax Act, 1961, to tax virtual digital assets. The rules also say that loss arising from digital asset cannot be carried forward to the next year.
The government also clarified Last week that losses arising out of the transfer of virtual digital assets cannot be set off against gains from another. It also said that mining costs cannot be treated as acquisition costs.
In February during a press conference, Sitharaman had said that the government and the Reserve Bank of India (RBI) are “on board” with respect to the treatment of cryptocurrencies and said that discussions are going on on the regulatory treatment of such digital virtual assets.
She had said: “We are all discussing prior to the Budget, discussion continues and we shall continue to have discussions. All the decisions which have been taken on it, obviously it has a very serious, it is a digital currency from the central bank of some description, so obviously with more focus having had consultations.”
She recently said that after the discussions are over, the government will sit and mull over it and then come out with its position on it.
In Rajya Sabha also, Sitharaman has said the government will decide on banning or not banning cryptocurrency later, taxing transactions doesn’t legitimise it.
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