The cryptocurrency market has been riding on an all-time high for the past few years. Bitcoin, established last 2009, is now valued at over $40,000. Many investors are starting to invest their money in cryptocurrency because many economic analysts are saying that cryptocurrency is the future of money. Many countries like El Salvador and even members of the US Congress are also investing their hard-earned money in Ethereum, Litecoin, or even Dogecoin. Other countries, in contrast, have active legislation against cryptocurrency – including India. Take a look at India’s stand on cryptocurrency and how it will impact its political and economic landscape.
India’s Cryptocurrency Bill
India’s congress decided to pass the cryptocurrency bill in the Centre’s legislative business for the Winter session of Parliament. The Cryptocurrency Bill’s objective is to create a facilitative framework for creating the official digital currency to be issued by the Reserve Bank of India or the RBI. The bill prohibits any private transactions of cryptocurrency in the country but allows exceptions to promote the innovative technology of crypto and its uses. Because of the strict terms of the bill, the bill was met with hesitations, and it will take a couple of parliamentary sessions to fully understand and revise the bill before it will pass as a law.
In addition to the cryptocurrency bill, the Indian Congress also wanted to tax anyone who had a virtual digital asset. The proposal was to one percent TDS on payments towards virtual currencies beyond Rs 10,000 in a year and the taxation of such gifts in the hands of the recipient. The threshold limit for TDS would be Rs 50,000 a year for specified persons, including individuals or HUFs who are required to get their accounts audited under the I-T Act. Lastly, no deductions on expenditure or allowance will be allowed while computing income transactions in virtual digital assets. The crypto tax bill also states that any loss from the transfer of cryptocurrency assets will not be offset in any other income stream. The additional 1% tax will be effective on July 1, 2022, while the gains will be taxed on April 1.
Is Crypto Banned in India?
As you can see, the Indian Congress set very hard rules in using and trading cryptocurrency for private individuals. According to Deputy Governor T Rabi Sankar of the Reserve Bank of India (RBI), their advice to the Indian Congress is to ban the private use of cryptocurrency in the country, mostly because of the unpredictable nature of the crypto industry. In addition, in their perspective, crypto is vulnerable to scams and Ponzi schemes.
According to Finance Secretary T V Somanathan, cryptocurrency will never be a legal tender. This means that cryptocurrency will never be an acceptable form of settling debts. The only digital asset considered a legal tender in India is the Digital Rupee.
Is Investing in Cryptocurrency in India Ideal?
According to RBI Governor Shaktikanta Das, cryptocurrency is a threat to India’s macroeconomic and financial stability. He warned private Indian investors against investing in these digital assets. Governor Das once again cautioned investors to invest in their own risk.