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India to introduce a New Cryptocurrency Bill?

Crypto, crypto, crypto! It looks like the news avalanche about cryptocurrencies is far from getting over.
No wonder the prices of cryptos have been so volatile in the past couple of weeks.
So why is there suddenly so much noise about crypto? Let’s find out

India’s Crypto bill

The country which has recently grabbed the most eyeballs with respect to cryptocurrency recently, is India. A new Cryptocurrency Bill will be introduced in Parliament in the ongoing session. The scope of the bill will cover the rapidly changing dynamics in the virtual currency space.

The Finance Ministry has mostly remained tight-lipped on the general architecture of the bill which has invited an array of speculations. Some say that the bill may ban all private cryptocurrencies in India, while others are much more optimistic. Many industry experts believe that this New Bill will be progressive and can propel India to the forefront of Blockchain technology.

There is also chatter about the possibility of the govt making amendments to the Income Tax Act in order to facilitate taxation of crypto gains realised in Indian and foreign crypto exchanges. We all know that taxes on crypto still remains quite ambiguous in India. However, since cryptocurrencies are legal in India, gains arising from them are subjected to taxes.

The bill is also expected to introduce an official Digital Currency regulated by the Central Bank. Minister of State for Finance, Pankaj Chaudhary believes that the introduction of a  central bank digital currency may lead to a more robust, efficient, trusted, regulated and legal tender-based payments option. He also adds that it may come with associated risks and they need to be weighed properly against the benefits.

Cryptocurrency is unregulated in India and the government does not collect any information about crypto trading. There have also been stats about the rising cases of fraud in the domain of crypto. The Enforcement Directorate is currently probing eight cases of cryptocurrency-related fraud. This has also led Govt, the RBI and the SEBI to caution people about the possible risks associated with cryptocurrency. They have also stated the fact that there is more scope to create greater awareness regarding the same.

In another news, South Korea’s decision to delay Crypto Taxation

South Korea is the second country that made it to the news for deciding to delay its plan of taxing cryptos by a year. This surely came as a relief to crypto investors in Korea and there is no denying that this decision will have an impact on global cryptocurrency prices.

Earlier, it was decided that South Korea will start taxing capital gains from the trading of cryptocurrencies from the next year i.e. 2022. Annual gains over 2.5 million from crypto trading were to be subjected to a 20% capital gains tax. However, young investors were not happy with this decision and they pushed back. It seems that the government has decided to uphold the wishes of the investors and it has, for the time being, decided to delay its decision till 2023.

So, what will India’s cryptocurrency Bill have in store for us? Only time will tell. Meanwhile, share your thoughts on cryptocurrency with us. 

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Got Questions? Ask Away!

  1. @Latesh_Bayad, there are two schools of thought for taxes on crypto, some believe it should be taxed as capital gains and others believe it should be considered as income from other sources.

    If the cryptocurrency is held as an Investment and being exchanged for Fiat Money it may be treated as capital gains.
    There are some articles which you might find useful

  2. Hey @Shama,

    The taxability of Cryptocurrencies arises under Income from Capital Gains if it is held as investment or trading. The cryptocurrency shall be considered as a Capital Asset and the taxability shall arise in the hands of person owning the same.
    In Your case, since, Person A is owner of the cryptocurrencies; so any gains arising from sale of cryptocurrencies shall be taxable in the hands of Person A as the data/KYC registered with exchange is that of Person A. It shall make no difference if the proceeds are received in Joint Savings A/c which is held along with Person B.
    Person B shall ignore the same proceeds in his ITR as Person A is paying the taxes in his ITR.

    Hope it helps!

  3. Avatar for Nireka Nireka says:

    Budget 2022 brings taxes on Crypto, NFTs and other Virtual Digital Assets

  4. Hi @Murali_Krishnan_S, if you are receiving profits in India then you will be taxed at 30% + 4% HEC and if you are receiving profits outside of India, then they are not taxable in India. You can also go through the blog attached below which will help you how the new budget affects you crypto trading and profits. Let me know if you need any further clarification. :blush:

  5. Irrespective of my tax slab ; crypto is taxed @30% . ?

    I mean if my income is zero and i made profit from crypto trading Rs. 1 lakh ; i pay tax 30,000/= ? Or i’ll get STGC excemption of 1 lakh ?

    Or crypto is taxed 30% based on my tax slab ?

    In this case ; if my income is 5 lakhs including 1 lakh income from crypto trading ; i declare crypto income in first slab which is taxfree upto 2.50 lakh !

    What is the rule ?

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