crypto tax: It is our sovereign right to tax cryptos: FM Sitharaman

Synopsis

Banning or not banning crypto assets will depend on the inputs given by consultants, Sitharaman said in the upper house of Parliament

Budget 2022: HighlightsBudget 2022: HighlightsNirmala Sitharamana, the Finance Minister, said, “I will tax (cryptocurrency) because it is our sovereign right.” Legitimate or illegitimate is a separate question, the union minister added.

In a reply to a query from Chhaya Verma, a Rajya Sabha member from Chhattisgarh, she clarified that if there is a gain from crypto transactions, the government has the right to tax them, but does not necessarily make them legal or illegal.

Banning or not banning crypto assets will depend on the inputs given by consultants, Sitharaman said in the upper house of Parliament.
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In the Union Budget, tabled on February 1, Sitharaman announced tax on gains from private cryptocurrency at a flat rate of 30 per cent, without any deduction or exemption.

The loss arising from the sale of any virtual assets cannot be set off against any other income. TDS at the rate of 1 per cent would be levied on payments made on transfer of digital assets.

The Reserve Bank of India (RBI) too has been skeptical about the use of private crypto assets and considers it as a major threat to macroeconomic and financial stability of the country.

In a press conference held on Thursday, RBI Governor Shaktikanta Das said, “I have said that investors are their own judge. But, it is my duty today to tell investors that while betting on cryptos, they should be mindful that they are investing at their own risk.”

Commenting on the central bank digital currency (CBDC) backed by RBI, he said that it will be the digital or electrical form of India’s fiat currency. CBDC will be issued by the apex bank of the country as a legal tender.

Vinu Peter Immanuel, Associate Partner, Link legal said, “Since decentralised cryptocurrencies have grown rapidly in an unregulated space, it is normal for regulators to be concerned about financial stability.”

It is true that despite being very promising, cryptocurrencies are a volatile asset class. Hence, as a financial regulator, the RBI is cautioning people speculating on it, he added. “It is essential to avoid any knee jerk reaction which could be counterproductive and consequently hamper growth.”

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Updated: 02/11/2022 — 03:00