Govt Changes Income Tax Laws to Bring Cryptocurrencies Under the Tax Net

cryptocurrencies under the tax net.

Revenue Secretary Tarun Bajaj told PTI on Friday that the government was mulling amendments to income tax legislation to bring cryptocurrencies under the tax net. These adjustments might be included in the upcoming fiscal year’s annual budget.

He also indicated that some people are already paying capital gains on bitcoin income. He went on to say that the laws of GST are also extremely clear. The same taxes rates would apply as in the case of other services.

“We’ll accept a phone call. I realise that individuals are already paying taxes on it. Now that it has developed significantly, we will see whether we can truly bring about any adjustments in legal stance. However, that would be a budgeted activity. We’re already getting close to the budget, so we’ll have to take a look at that point in time “In an interview with PTI, Bajaj stated.

When asked about the possibility of enforcing a tax collection provision for crypto trading, the secretary stated, “If we come up with a new legislation, then we will see what is to be done.”

He also stated that the government will use current criteria to categorise facilitators, brokerages, and trading platforms, as well as the mode of taxing from existing platforms providing comparable activities. He went on to say that whatever GST rates currently in place for them would be applied to bitcoin transactions as well. “They must first register themselves. The GST legislation is extremely clear. If there is an activity, such as a broker assisting clients and collecting a brokerage fee, GST will be applied “He stated.

The government is scheduled to present a measure regulating cryptocurrency trading during the parliament’s winter session, which begins on November 29. This comes amid growing worries about unregulated assets attracting investors with deceptive claims. Notably, in recent times, there has been an increase in the number of advertising, including those involving film stars, promising simple and big profits on cryptocurrency investments.

At the time of writing, India has no regulatory framework in place to govern the usage of cryptocurrencies. Prime Minister Narendra Modi met with senior officials last week to discuss cryptocurrencies, and there are hints that significant regulatory measures may be enacted to address the issue.

Earlier last week, the Standing Committee on Finance, led by BJP member Jayant Sinha, met with members of cryptocurrency exchanges, blockchain, and the Crypto Assets Council (BACC), among others, and concluded that cryptocurrencies should not be prohibited, but rather regulated.

The Reserve Bank of India’s head, Shaktikanta Das, has stated that cryptocurrency is a significant worry for the central bank in terms of macroeconomic and financial stability. “I can state with considerable certainty that the number of players (in the bitcoin market) appears overblown. The majority of investors have put in Rs 1000, Rs 2000, or Rs 3,000. Perhaps there is a concerted effort to enrol as many individuals as possible “as indicated by the governor

In early March 2020, the Supreme Court struck down the RBI circular prohibiting the use of cryptocurrency. Following this, on February 5, 2021, the central bank established an internal panel to recommend a model for the central bank’s digital currency. The RBI revealed its intention to create an official digital currency in response to the rise of cryptocurrencies such as Bitcoin, which the central bank is concerned about.

On March 4, 2021, the Supreme Court overturned an RBI circular issued on April 6, 2018, barring banks and businesses regulated by it from offering virtual currency services.

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