Amid the exponential rise in crypto adoption in India, the Indian government has fastened its groundwork for introducing crypto regulations in India.
According to various reports, the developments are happening at multiple levels. While the department of revenue (under the finance ministry) is preparing a framework to levy taxes on crypto assets such as non-fungible tokens, capital gains on crypto trading and more; meanwhile, the department of economic affairs is finalising the content of draft cryptocurrency bill based on cabinet note prepared earlier.
The Bill could be introduced in the next Winter or Budget Session of the parliament, depending on its readiness. However, the revenue department will not wait for the Bill and will introduce a tax framework for crypto to bring in more clarity on crypto taxation, says reports.
Govt Declines To Disclose The Draft Crypto Bill
In response to an RTI on the draft Crypto Bill, the ministry of finance, on November 3, stated that it cannot provide more information with regards to the draft since the matter is under process.
The response invoked Section 8(1)(i) of the RTI Act 2005, according to which cabinet papers including records of deliberations of the council of ministers, secretaries and other officers and such matters come under the exemptions and can not be disclosed under the Act.
Commenting on the draft bill, Ashish Singhal, co-chair, Blockchain and Crypto Assets Council (BACC) & founder & CEO of CoinSwitch Kuber said that while there is news about the crypto bill, the BACC does not have any official communication yet.
“We are hopeful that the government will involve the industry stakeholders while drafting the bill. We are also in the process of actively communicating to all key stakeholders on this matter,” said Singhal.
Crypto Taxation Framework
Speaking to Inc42, N. S. Nappinai, advocate, Supreme Court of India and founder of Cyber Saathi had earlier stated that the construct of taxation on crypto assets is still a grey area. However, declaring and paying taxes on any form of gains or income from or by way of crypto is advisable. In general, mined crypto assets would attract income tax, and those purchased through trading and crypto transactions on exchanges would be amenable to capital gains taxation.
According to a Business Standard report, the department of revenue is introducing a tax framework asserting that this will not in any way legitimise crypto in India.
“The legality of the asset per se is of no consequence to taxability,” according to a revenue department official.
The rules will bring clarity around taxing capital gains on crypto and GST depending upon the nature of crypto supplies and will remain in place even if the Indian government passes the crypto bill.
Sathvik Vishwanath, CEO and cofounder of Unocoin and a member Blockchain and Crypto Assets Council (BACC) said that the presentation of crypto bill has been long pending and will be one of the main steps to bring regulation to the crypto industry in India. This would at least trigger the conversation to establish some kind of categorisation for crypto assets before a realistic and implementable bill gets drafted. Else the country may have to live in the darkness session after session.
In a detailed report, Inc42 had earlier discussed the taxation regarding crypto mining, trading and services.
Crypto Market Hits $3 Tn
Meanwhile, leading cryptocurrencies — Bitcoin and Ethereum have hit their all-time high at $68K and $4.8K respectively, and the global crypto market has also crossed $3 Tn market cap for the time ever.
Commenting on this, Netero Dai, Asia CEO, OKEx, said that inflation is the biggest enemy of investments and crypto assets provide a strong hedge against inflation; institutional and retail investors have now realised crypto as an asset class. The much-expected Bitcoin upgrade aka Taproot will bring in a more efficient system and further boost the confidence of new and old investors.
Bitcoin will keep testing its all-time highs and hit the $100,000 mark by the end of this year, said Shivam Thakral, CEO, BuyUcoin.