New Delhi: Speaking during the Budget Session on Friday, Finance Minister Ms Sitharaman quoted – the govt has sovereign rights to tax profit made from cryptocurrency transactions and the decision on banning or not banning will be taken based on feedback form consultations. This statement comes a day after the RBI chief voiced serious concerns around private cryptocurrencies on the grounds that these may cause financial instability.
“Whether it is legitimate or illegitimate, it is a different question, but I will tax because it is a sovereign right to tax”. The minister was responding to the questions raised by Congress member Chhaya Verma on cryptocurrency. Verma had asked about the legitimacy of taxing cryptocurrency.
She also clarified the legalities of cryptocurrency in India, saying that taxing virtual assets does not mean that the government is legalising it. “Not doing anything to legalise or ban it at this stage,” Sitharaman replied to the Budget debate in Rajya Sabha on the decision to levy 30% tax on gains from the virtual assets.
According to industry estimates, India holds nearly 15-20 million crypto investors with the total crypto holdings of the nation summing up to Rs 40,000 crore. On the 1st of February, the finance minister presenting the Budget announced the proposal of taxing gains arising out of virtual digital assets at a flat rate of 30% irrespective of the individual’s income tax slab rate. In addition, a 1% tax deducted at source (TDS) will be applicable on the transfer of such assets over a certain threshold.