Government to change laws in budget to tax cryptocurrency gains: Finmin

Government to change laws in budget to tax cryptocurrency gains: Finmin

A top official said the government is considering changes to income tax laws to bring cryptocurrencies under the tax net, some changes that could become part of next year’s budget.

Revenue Secretary Tarun Bajaj said that in terms of income tax, some people are already paying capital gains tax on income from cryptocurrencies, and the law is “very clear” with respect to the Goods and Services Tax (GST) as well. That rate would be applicable in case of other services.

“We’ll take a decision. I understand people are already paying taxes on it. Now that it’s really increased, we’ll see if we can actually bring some change in the state of the law. But It will be a budget activity. We are already close to budget, we have to look at that time,” Bajaj told PTI in an interview.

When asked whether the provision of TCS (Tax Collected at Source) can be introduced for crypto trading, the secretary said, “If we come out with a new law, we will see what has to be done.”

He said, “But yes, if you earn money then you have to pay tax… We have already got some tax, some have treated it as an asset and have paid capital gains tax on it. ”

When asked whether those involved in cryptocurrency trading would be classified as facilitators, brokerages and trading platforms and how they would be taxed under GST, Bajaj said, “Such things will already be available in other services as well. Therefore, they are taxed at whatever rate of GST, which will be applicable to them.”

He said, “They have to get themselves registered. The GST law is very clear. If there is any activity, if there is a broker who is helping people and is charging brokerage fee, then GST will be charged.”

Separately, the government is likely to introduce a bill on cryptocurrencies during the winter session of parliament that begins on November 29, amid concerns about such currencies purportedly used to lure investors with misleading claims. He is going.

Notably, in recent times there has been an increasing number of advertisements featuring movie stars, promising easy and high returns on investment in cryptocurrencies.

Currently, there is no regulation or any restriction on the use of cryptocurrencies in the country. Against this backdrop, Prime Minister Narendra Modi last week held a meeting on the cryptocurrency with senior officials and indicated that stronger regulatory steps could be taken to tackle the issue.

Earlier this week, the Standing Committee on Finance, headed by BJP member Jayant Sinha, met representatives of the Crypto Exchanges, Block Chain and Crypto Assets Council (BACC), and came to the conclusion that cryptocurrencies should not be banned, But it should be regulated.

RBI has repeatedly reiterated its strong views against cryptocurrencies, stating that they pose a serious threat to the country’s macroeconomic and financial stability and the number of investors trading on them as well as their claimed Doubt the market value as well.

RBI Governor Shaktikanta Das also reiterated his view against allowing cryptocurrencies earlier this month, saying they pose a serious threat to any financial system as they are unregulated by central banks.

In early March 2020, the Supreme Court struck down an RBI circular banning cryptocurrencies. Subsequently, on February 5, 2021, the central bank constituted an internal panel to suggest the model for the central bank’s digital currency.

The RBI had announced its intention to come up with an official digital currency in the face of the proliferation of cryptocurrencies such as bitcoin, about which the central bank has many concerns.

Private digital currencies/virtual currencies/cryptocurrencies have gained popularity over the past decade. Here, regulators and governments are skeptical about these currencies and are apprehensive about the associated risks.

It may be noted that on March 4, 2021, the Supreme Court set aside the RBI circular dated April 6, 2018, barring banks and entities regulated by it from providing services in respect of virtual currencies.

(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is generated automatically from a syndicated feed.)

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