Following the announcement on cryptocurrency taxation by Indian Finance Minister Nirmala Sitharaman, Finance Secretary T. V. Somanathan clarified that crypto is not illegal in India.
He was asked on Bloomberg Television Wednesday whether the proposed taxation means cryptocurrency will be legalized in India. “Crypto-assets, we don’t call them cryptocurrencies. Crypto assets are currently neither illegal nor are they encouraged,” he replied, adding:
They are in a grey area. They are not illegal. It’s not illegal to buy or sell crypto assets in India, and it continues to be not illegal.
“But, we have now put in a taxation framework that treats crypto assets the same way that we treat winnings from horse races, or from bets or from other speculative transactions,” he continued. “So it’s being taxed at the same rate as speculative transactions and not at the same rate as financial market transactions.”
The Indian finance minister announced during her budget speech Tuesday that income from cryptocurrency transactions will be taxed at 30%, the country’s highest tax bracket. She noted that “No deduction in respect of any expenditure or allowance shall be allowed while computing such income, except the cost of acquisition.”
Commenting on crypto regulation, Somanathan emphasized, “We are not going to jump the gun on crypto regulation but we are going to make sure that any income that is earned is liable to taxation.”
What will happen to the future regulation of crypto? That’s an ongoing debate. But I think the government’s approach is to consult widely and also to look at what’s happening internationally in terms of crypto regulation.
The Indian government did not list a cryptocurrency bill to be considered in the budget session of parliament. Meanwhile, the Reserve Bank of India (RBI) plans to launch its central bank digital currency (CBDC) in the financial year starting April 1, the finance minister said Tuesday.