India’s crypto bill likely to miss budget session of Parliament

Synopsis

The government wants to wait for the pilot launch of the Reserve Bank of India’s digital currency expected in a few months before introducing the crypto bill in parliament.

While the central government is keen on the cryptocurrency bill, it is looking to hold more discussions with stakeholders to firm up a view on the policy.Budget 2022: Complete CoverageBudget 2022: Complete CoverageNew Delhi: The Centre is unlikely to introduce the much-awaited cryptocurrency bill in the upcoming budget session of Parliament as it wants to hold more discussions and build consensus on the regulatory framework. The government also wants to wait for the pilot launch of the Reserve Bank of India’s digital currency expected in a few months.

While the Centre is keen on the bill, it is looking to hold more discussions with stakeholders to firm up a view on the policy, according to officials with knowledge of the matter.

“The crypto bill may not be introduced in the budget session. It is a complex subject. This will require more time,” a senior finance ministry official told ET.
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A legislative framework for virtual currencies will also require the amendment of some existing laws. The government wants to wait for technical inputs from the RBI after the pilot launch of its digital currency, the official said. The central bank has raised concerns about private digital currencies, citing macroeconomic and financial stability issues.

The government had initially listed the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, for introduction in the Lok Sabha in the winter session but that didn’t happen.

No consensus on taxation

Another reason for the delay may be the lack of consensus over the taxation framework for virtual currencies, said people with knowledge of the matter. While the government may give some direction on taxation for investors in cryptocurrency assets in the upcoming budget, a full-fledged taxation framework for the cryptocurrency industry is still a work in progress, they said.

There is already a consensus on treating cryptocurrencies as assets, an official said, but other issues were still open ended.

ET had earlier reported that the finance ministry has sought inputs from tax experts. While the revenue department has received multiple tax proposals from various stakeholders, it is yet to form a consensus and finalise the rules to tax gains from cryptocurrencies, officials said.

One key view is to treat digital currencies as equities, where profits can be treated as capital gains or business income based on clearly specified conditions. The counter view is that they should be treated solely as capital gains.

Tax experts said that the existing provisions are not clear and more clarity is needed.

“There are no specific provisions in the law to tax gains in crypto assets and hence it requires further clarity,” said Rohinton Sidhwa, partner at Deloitte India. “There should be a direction on cryptocurrency taxation in the budget.”

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Updated: 01/18/2022 — 11:00