The government will not pass a law on cryptocurrencies until a global consensus emerges that regulates these assets, according to a Bloomberg report citing sources. She said the government does not plan to legislate soon to either regulate cryptocurrency or tighten provisions.
As of now, the legal status of cryptocurrencies is unclear as there is no law in the country to regulate them. Following the proposal for a federal budget tax on cryptocurrencies, investors said the provisions effectively legalized cryptocurrency trading. However, Finance Minister Nirmala Sitharaman said that taxing cryptocurrencies does not mean they are legalized. The matter is still under consideration.
Sitharaman also said that the government will announce its stance on cryptocurrency after completing the ongoing consultation process. In the past, the Reserve Bank of India warned people not to invest in cryptocurrencies. Referring to the speculative bubble that engulfed the Netherlands in the 17th century, Reserve Bank of India Governor Shantikanta Das said that these digital assets lacked intrinsic value even a tulip.
Union Budget 2022 proposed a 30 percent tax on profits from the sale of all crypto assets, with a one percent tax deducted at source on all such transactions. The new rules are effective from Friday (April 1). According to the new rules, no deduction will be allowed, except for the acquisition cost, and no transaction loss will be allowed to offset the gains. A new section 115BBH was included in the Income Tax Act 1961, to tax virtual digital assets. The rules also state that losses from digital assets cannot be carried over into the next year.
The government also made it clear last week that losses from the transfer of virtual digital assets cannot be offset against other gains. She also said that mining costs cannot be treated as acquisition costs.
In February during a press conference, Sitharaman said that the government and the Reserve Bank of India (RBI) were “on board” regarding the processing of cryptocurrencies, and said discussions were underway regarding the regulatory treatment of these digital virtual assets.
She said: “We are all discussing before the budget, the discussion continues and we will continue the discussions. All the decisions that have been taken on it, it is clear that they are very serious, it is a digital currency from the central bank of some description, so obviously with more focus after the consultations.”
She recently said that after the talks are over, the government will sit down and think about the matter and then come out with its position.
Also in the Rajya Sabha, Sitharaman said that the government will decide whether or not to ban cryptocurrency later, and imposing tax on transactions does not legitimize it.