New Delhi: The government is considering changes to the income tax laws to bring cryptocurrencies under the tax net, with some changes that could form part of the budget next year, a top official said.
Tarun Bajaj, secretary of revenue, said that in terms of income tax, some people are already paying capital gains tax on the income from cryptocurrency, and with regard to Goods and Services Tax (GST), the law is also “very clear” that the rate will be . applicable as in the case of other services.
“We will take a call. I understand that people are already paying taxes on it. Now that it’s really grown a lot, we’ll see if we can really bring about some changes in legal position or not. But it would be a budget activity. We are already approaching the budget, we have to look at that time, “Bajaj said in an interview with PTI.
Asked if a provision of TCS (Tax Collected at Source) could be introduced for crypto-trading, the Secretary said “if we come up with a new law, we will see what needs to be done”.
“But yes, if you make money you have to pay taxes … We already have some taxes, some have treated it as an asset and paid capital gains tax on it,” he said.
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 will already be such things available in other services as well. So at whatever GST rate they are taxed, it will apply to them. ”
“They have to register themselves. The GST law is very clear. “If there is an activity, if there is a broker who helps people and charges a brokerage fee, GST will be charged,” he said.
Separately, the government is likely to introduce a bill on cryptocurrencies during the Winter Session of Parliament from November 29, amid concerns over such currencies allegedly used to lure investors with misleading claims.
In particular, there have been a growing number of advertisements, with even movie stars, promising easy and high returns on investments in cryptocurrencies in recent times.
Currently, there is no regulation or any ban on the use of cryptocurrencies in the country. Against this background, Prime Minister Narendra Modi last week held a meeting on cryptocurrencies with senior officials and indications are that strong regulatory steps can be taken to address the issue.
Earlier this week, the Standing Committee on Finance, chaired by BJP member Jayant Sinha, met with representatives of, among others, crypto exchanges, blockchain and Crypto Assets Council (BACC) and concluded that cryptocurrencies do not should be banned, but it should be regulated.
The RBI has repeatedly reiterated its strong stance against cryptocurrencies, saying it poses serious threats to the country’s macroeconomic and financial stability and also casts doubt on the number of investors trading with it, as well as their claimed market value.
RBI Governor Shaktikanta Das also reiterated his views against the admission of cryptocurrencies earlier this month, saying it is a serious threat to any financial system as it is not regulated by central banks.
In early March 2020, the Supreme Court annulled the RBI circular banning cryptocurrencies. Following this, on 5 February 2021, the central bank set up an internal panel to propose a model of the central bank’s digital currency.
The RBI has announced its intention to come out with an official digital currency, given the proliferation of cryptocurrencies such as Bitcoin that the central bank is very concerned about.
Private digital currencies / virtual currencies / cryptocurrencies have become popular in the last decade or so. Here, regulators and governments have been skeptical about these currencies and are concerned about the associated risks.
It may be noted that on March 4, 2021, the Supreme Court set aside an RBI circular of April 6, 2018, prohibiting banks and entities regulated by it from providing services related to virtual currencies.
Source: Telangana Today