The Union government will not be able to get the cryptocurrency bill ready in time for the upcoming budget session as it continues to hold more discussions around crypto assets, Economic Times reported. The pilot launch of the Reserve Bank of India’s digital currency project is one of the reasons behind the delay, the report added.
A legislative framework for crypto assets will require an amendment to some existing laws, as per ET, and the government wants to wait for technical inputs from the RBI. Moreover, there is no clarity among lawmakers on a framework for taxation of crypto assets which is also one of the reasons for the delay, the report said.
India’s crypto industry has grown exponentially over the past few years, but concerns about the lack of regulations continue plaguing the sector. The much-awaited cryptocurrency bill may address these concerns but it is unclear as to when it will see the light of day.
Crypto industry wants clarity on taxation
IndiaTech, a tech industry association whose members include Zebpay, CoinDCX, Coinswitch Kuber, and WazirX, called for the finance ministry to clarify taxation around crypto assets in the upcoming Budget Session.
The organisation also urged the Indian government to only let registered or founded-in-India cryptocurrency exchanges operate such businesses. It further argued that by allowing only “Indian founders to operate such businesses”, the country will be able to save money that would otherwise have to be paid to foreign exchanges.
“It is recommended that minimum ownership of 26% by Indian founders/entities in Crypto exchanges like the practice followed in the banking sector in India (FDI cap at 74%),” the letter read.
IndiaTech also wants the government to formally name crypto assets in tax laws. “The budget document should also name and classify cryptocurrencies to be defined as digital assets and not currencies and grant them recognition as digital assets,” the letter read.
Recognise crypto under direct tax laws
“Enable necessary provision in the Direct Tax laws to render recognition and treatment under the head of Income ‘Profit and Gains from Business and Profession’ or ‘Income from Capital Gains’ depending on the kind of business of the holder and the timelines and nature of holding,” the letter read.
The finance ministry is consulting various tax experts on taxation but there is no consensus as of yet, as per another ET report.
Cryptocurrency bill was first expected in Winter Session
The Union government listed the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, for introduction before the start of the winter session of the Parliament. On the Lok Sabha agenda, the purpose of the bill was unchanged from when it was earlier listed in February 2021:
To create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India. The Bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses. (emphasis ours)
The unchanged description caused many crypto investors in India to panic and sell off their crypto holdings, owing to which prices of all major cryptocurrencies plummeted steeply.
Finance Minister Nirmala Sitharaman affirmed that the government had every intention of introducing a crypto bill in the winter session. However, she later clarified that the government is bringing a new cryptocurrency bill which will be presented before the Cabinet soon.
- Will defining crypto assets as capital assets have an impact on their operation in India?
- Addressing the taxation and money laundering concerns associated with crypto-assets
- Crypto-assets: A challenge to India’s strong exchange control laws
- IMF calls for level-playing field in global regulatory framework for crypto assets
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