Authorities in India have begun working on how they will tax crypto gains, i.e., profits made from cryptocurrency trading.
This is as the Indian government continues to blow hot and cold regarding crypto and crypto operations in the country. Local report claims that rather than an outright ban on cryptocurrencies, authorities plan to implement the crypto gains tax.
Economic Times quoted sources close to the matter as saying that the government is contemplating taking a different approach to the digital asset space.
They noted that the plans to tax crypto gain is coming from the local tax department in India. The source noted that India taxing crypto gains does not mean that the country would accept cryptocurrencies as a valid asset class.
It is a function of the government belief that every activity generating any income for locals should be taxed.
Arguably, the Asian country has the most controversial views on the digital asset industry.
India going back and forth on crypto policies
Back in 2018, India’s apex bank, The Reserve Bank of India (RBI), forbade all customers from operating with anyone even remotely associated with the crypto industry.
It took the intervention of the Supreme Court to reverse the decision early in 2020. The RBI, however, continued its stance against digital asset usage, even though some reports suggested that locals are quite fond of BTC and other cryptocurrencies.
From its body language, it is safe to say the Reserve Bank prefers to have more control over what currencies the public uses.
RBI Governor Shaktikanta Das confirmed recently that the apex bank would launch trials for a central bank digital currency by the end of the year.
Also, the government would impose an 18 percent tax on any foreign cryptocurrency exchanges operating in the large local market.
Could India ban cryptos? experts speak
Back in February when a ban on crypto in India looked like what was going to happen, experts in the countries thought otherwise.
In an article by Kumar Gaurav, the Founder and Chief Executive of Cashaa, he believes crypto can not be banned in the country. Gaurav said in another interview that “there is no way any government” can ban crypto completely. Still, the government can make life difficult for cryptocurrency hodlers.
“They can certainly ban the legitimate use of crypto, which will only make it difficult for a common person who does not understand it to get involved in it,” said Gaurav. “However, what we understand is that the Indian government is trying to crack down on scams that are running in the name of Bitcoin.” In other words, the Indian government may not be opposed to the usage of cryptocurrencies, just the crimes associated with them.
Nischal Shetty, Chief Executive of cryptocurrency exchange, WazirX, India’s most trusted exchange, painted a few scenarios regarding the bill. He says it may not come up in this session of Parliament or come up but is referred to a standing committee. Lastly, he said it might come up and is passed in its current form.
Shetty described the first scenario as “the best-case scenario right now,” he also said that “we’ll need to push harder on educating our lawmakers about the pros of regulating crypto.
India cannot miss this technology & value creation that the crypto industry would provide, he said.