Tax laws

the government could change income tax laws to tax cryptocurrency earnings in the budget

  • The government plans to make changes to income tax laws to bring cryptocurrencies under the tax net in the 2022 budget.
  • Also, he is likely to introduce a cryptocurrency bill in the winter session of parliament.
  • This comes amid a growing number of advertisements, even featuring movie stars, promising easy and high returns on investing in cryptocurrencies.

The government is considering changes to income tax laws to bring cryptocurrencies into the tax net, with some changes possibly 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 cryptocurrency income, and with respect to goods and services tax (GST), the law is also “very clear” that the rate would apply like those in other service cases.

“We’ll take a call. I understand people are already paying tax on it. Now that it’s really grown a lot, we’ll see if we can actually make any changes to the position of the law or not. But that would be a budget We are already approaching the budget, we have to look at that time,” Bajaj told PTI in an interview.

Asked about the possibility of introducing a TCS (tax collected at source) provision for crypto trading, the secretary replied “if we come up with a new law, we will see what needs to be done”.

“But yes, if you make money you have to pay taxes… We already have taxes, some have treated it as an asset and have paid capital gains tax,” he said. he declares.

When asked if people involved in cryptocurrency trading would be classified as a facilitator, brokerage and trading platform and how taxation would be done under GST, Bajaj said “there would already be such things available in other services as well. So whatever GST rate they are taxed at, that will be applicable 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, GST would be charged,” a- he declared.

Separately, the government is likely to introduce a cryptocurrency bill during the winter session of parliament which begins on November 29, amid concerns over the alleged use of cryptocurrencies to lure investors with misleading claims.

Notably, there have been an increasing number of advertisements, even featuring movie stars, promising easy and high returns on cryptocurrency investments lately.

Currently, there are no regulations or bans on the use of cryptocurrencies in the country. In this context, Prime Minister Narendra Modi held a meeting on cryptocurrencies with senior officials last week and it seems that strict regulatory measures could be taken to solve the problem.

Earlier this week, the Finance Standing Committee, chaired by BJP member Jayant Sinha, met with representatives of crypto exchanges, blockchain and the Crypto Assets Council (BACC), among others, and arrived at the conclusion that cryptocurrencies should not be banned, but it should be regulated.

The RBI has repeatedly reiterated its tough stance against cryptocurrencies, saying they pose serious threats to the country’s macroeconomic and financial stability and also doubted the number of investors trading them as well as their claimed market value. .

RBI Governor Shaktikanta Das had also reiterated earlier this month his view against allowing cryptocurrencies, saying they pose a serious threat to any financial system as they are unregulated. by central banks.

The Supreme Court in early March 2020 struck down the RBI circular banning cryptocurrencies. Following this, on February 5, 2021, the central bank had instituted an internal panel to propose a central bank digital currency model.

The RBI had announced its intention to release an official digital currency, in the face of the proliferation of cryptocurrencies like Bitcoin, which the central bank has many concerns about.

Private digital currencies/virtual currencies/crypto currencies have grown in popularity over the past decade. Here, regulators and governments have been skeptical of these currencies and fear the associated risks.

It may be noted that on March 4, 2021, the Supreme Court had annulled an RBI circular of April 6, 2018, prohibiting banks and entities regulated by it from providing services related to virtual currencies.

SEE ALSO: PhonePe announces ESOP buyout worth ₹135,000,000 for employees

Bitcoin investors love the golden cross and the death cross – here’s why they matter, but there are other factors to keep in mind

Flipkart’s Binny Bansal bets on Zomato co-founder’s two-year venture