A day after announcing taxing crypto transactions just the same as winnings from gambling, the government said it doesn’t treat trading in crypto assets as illegal. Finance Secretary T V Somanathan said that the cryptos are in a grey area. It is not illegal to sell and buy crypto.
He added that they have now put in a taxation system that treats crypto assets the same way they treat winning from the bets, horse races, or other speculative transactions. After years of delaying on how to treat cryptos, on Tuesday the budget suggested taxing income from the transfer of virtual assets at 30% – effectively removing any ambiguity about the legal status of such transactions.
The high tax rate on crypto assets could prevent trades that have been surging in the country despite the central bank’s warnings about the risks of terror financing, money laundering, and price volatility. The government is working on legislation to regulate cryptos and the suggested law will have to be cleared by the Union Cabinet before being taken to lawmakers.
He said that for now, the government won’t jump the gun in regulation and would stick to taxing any income that is earned from such dealings. According to the government, while private virtual coins will not be a legal tender, the RBI intends to launch its digital currency in the year starting April 1, which will usher in more efficient and cheaper currency management.