New Delhi: The government is mulling changes in the income tax laws to make cryptocurrency gains taxable, with some changes that could form part of the Budget next year, Revenue Secretary Tarun Bajaj said Thursday. Bajaj said that in terms of income tax, some people are already paying capital gains tax on the income from cryptocurrency, and in respect of Goods and Services Tax (GST) also the law is “very clear” that the rate would be applicable as those in case of other services. Asked whether people involved in cryptocurrency trading would be categorized as a facilitator, brokerage and trading platform and how the taxation would be done under GST, Bajaj said “there would already be such things available in other services also. So whatever GST rate they are taxed at, that will be applicable on them.”
Separately, the government is likely to introduce a bill on cryptocurrencies during the Winter Session of Parliament beginning November 29th. Prime Minister Narendra Modi, last week, held a meeting on cryptocurrencies with senior officials and indications are that strong regulatory steps could be taken to deal with the issue. Earlier this week, the Standing Committee on Finance, chaired by BJP member Jayant Sinha, met the representatives of crypto exchanges, blocks chain and Crypto Assets Council (BACC), among others, and arrived at a conclusion that cryptocurrencies should not be banned, but it should be regulated.
The RBI has repeatedly reiterated its strong views against cryptocurrencies saying they pose serious threats to the macroeconomic and financial stability of the country. The Supreme Court in early March 2020 had nullified the RBI circular banning cryptocurrencies. Following this on February 5th, 2021, the central bank had instituted an internal panel to suggest a model of the central bank’s digital currency. The RBI had announced its intent to come out with an official digital currency, in the face of the proliferation of cryptocurrencies like Bitcoin about which the central bank has many concerns.