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Indian entrepreneurs believe that crypto tax rules are essential for government acceptance of cryptocurrency.
Experts feel investors should be at ease as the Income Tax Department of India reportedly contemplates charging crypto traders and crypto exchanges shortly.
According to ET Now’s report, the tax department, which operates under India’s Ministry of Finance, has signaled interest to tax crypto earnings through trade and exchanges. However, the sources claim that the move will not entitle cryptocurrencies to a valid asset class position.
Speaking to Cointelegraph, Indian entrepreneur Nischal Shetty, CEO of WazirX crypto exchange, said that getting clarity on crypto-related Goods and Services Tax (GST) will help in identifying the asset class of cryptocurrencies:
“It’s a no-brainer that your crypto earnings are taxable like other income and should be declared in the Income Tax Returns. As of now, it is not clear whether the GST would be applied on the amount of cryptocurrency bought or on the transaction fees paid by the user.”
According to the original report, the Indian government believes that any activities that create income in cryptocurrencies must be taxed. However, the cabinet’s soon-to-be-released legislative proposal will provide more clarification on this choice.
On September 9, Reserve Bank of India Governor Shaktikanta Das expressed his concerns regarding cryptocurrencies like Bitcoin (BTC): “From the standpoint of financial stability, we have highlighted to the authorities our severe and big worries regarding cryptocurrencies.”
In response to the possibility of a pending legislative measure on crypto taxation, Indian investor Evan Luthra of the Luthra Group stated that taxing digital currencies is “a positive thing.”
“I think investors and potential investors have nothing to be scared about. Governments that realize the true potential of cryptocurrencies and bring in policies to support the innovation will be the leaders of the future.”
On January 25, the Reserve Bank of India (RBI) released a pamphlet that explores the use cases for a digital form of fiat currency.
While the government sees only two feasible choices for cryptocurrency, adoption or total ban, the RBI intends to introduce its own version of CBDC if “there is a need.”