Tax laws

Government to change tax laws in budget to tax cryptocurrency earnings

NEW DELHI: The government is considering changes to tax laws to bring cryptocurrencies under the tax net, with some changes that could be part of next year’s budget, a senior official said.
Revenue Secretary Tarun Bajaj said that in terms of income tax, some people already pay capital gains tax on income from cryptocurrency, and with respect to product tax and services (GST), the law is also “very clear” that the rate would apply only in the case of other services.
“We’ll take a call. I understand people are already paying taxes on it. Now that it’s really gone up a lot, we’ll see if we can actually make changes to the law’s position or not. But that would be a budget. are already approaching the budget, we have to look at that time, ”Bajaj told PTI in an interview.
When asked if a TCS (Tax Collected at Source) provision could be introduced for crypto trading, the secretary replied “if we come up with a new law we will see what to do”.
“But yes, if you make money you have to pay taxes … We already have taxes, some have treated it as an asset and paid capital gains tax on it”, did he declare.
When asked if those involved in cryptocurrency trading would be classified as a facilitator, brokerage and trading platform and how taxation would be carried out under the GST, Bajaj said that “of such things would already be available in other services as well. So whatever rate of GST they are taxed at, it will apply to them. ”
“They have to register. The GST law is very clear. If there is an activity, if there is a broker who helps people and charges brokerage fees, the GST will be charged”, a- he declared.
Separately, the government is likely to introduce a cryptocurrency bill during the winter session of parliament that begins on November 29, when those currencies are said to be used to lure investors with misleading claims.
Notably, there have been a growing number of advertisements, even featuring movie stars, promising easy and high returns on cryptocurrency investments in recent times.
Currently, there is no regulation or ban on the use of cryptocurrencies in the country. Against this backdrop, Prime Minister Narendra Modi last week held a cryptocurrency meeting with senior officials and it looks like strong regulatory action could be taken to address the issue.
Earlier this week, the Standing Committee on Finance, chaired by BJP member Jayant Sinha, met with representatives from crypto exchanges, blockchain and the Crypto Assets Council (BACC), among others, and came to the conclusion that cryptocurrencies shouldn’t be banned, but it should be regulated.
The RBI has repeatedly reiterated its firm stance against cryptocurrencies, claiming that they pose serious threats to the country’s macroeconomic and financial stability and has also questioned the number of investors trading there as well as their market value. claimed.
Earlier this month, RBI Governor Shaktikanta Das also reiterated his views against allowing cryptocurrencies, saying they pose a serious threat to any financial system because they are not regulated by central banks.
The Supreme Court, in early March 2020, quashed the RBI circular banning cryptocurrencies. Following this on February 5, 2021, the central bank set up an internal panel to propose a model of the central bank’s digital currency.
The RBI had announced its intention to release an official digital currency, in the face of the proliferation of cryptocurrencies such as Bitcoin, of which the central bank has many concerns.
Private digital currencies / virtual currencies / crypto currencies have grown in popularity over the last decade or so. Here, regulators and governments have been skeptical of these currencies and fear the associated risks.
It can be noted that on March 4, 2021, the Court of Cassation canceled an RBI circular of April 6, 2018, prohibiting banks and entities regulated by it from providing services in the field of virtual currencies.