Written by Shankhyaneel Sarkar | Edited by Poulomi Ghosh, Hindustan Times, New Delhi
The Centre is planning new changes in the income tax laws in a bid to bring cryptocurrencies under the tax radar, people familiar with the developments told news agency PTI. These changes could form part of the Union Budget in 2022, an official said.
“We will take a call. I understand that already people are paying taxes on it. Now that it has really grown a lot, we will see whether we can actually bring in some changes in law position or not. But that would be a Budget activity. We are already nearing the Budget, we have to look at that point of time,” revenue secretary Tarun Bajaj was quoted as saying by news agency PTI.
Bajaj also pointed out that when it comes to income tax, people are already paying capital gains tax on the income from cryptocurrency. He said that with respect to Goods and Services Tax (GST) the law is very clear that the rate would be applicable as those in case of other services.
“If you make money you have to pay taxes. We have already got some taxes, some have treated it as an asset and paid capital gains tax on it,” Bajaj further said. He stressed that GST will be charged if there is a broker aiding people and also charging a brokerage fee. “They have to get themselves registered. The GST law is very clear,” Bajaj said in response to a query seeking to know if people involved in cryptocurrency trading would be categorized as facilitator, brokerage and trading platform.
The proposal to bring cryptocurrency gains under the ambit of tax comes amid reports that the government is mulling to introduce a bill on cryptocurrencies during the winter session of Parliament beginning November 29. The government expressed concern earlier that cryptocurrency is being used to lure in investors.
Prime Minister Narendra Modi earlier also held a meeting to discuss concerns related to cryptocurrency and at the Sydney Dialogue appealed that democratic nations must come together to ensure cryptocurrency does not end up in the wrong hands.
The Reserve Bank of India on several occasions highlighted that it feels cryptocurrencies like BitCoin may pose a risk to financial stability and also questioned its claims of market value. The Supreme Court last year, however, nullified the RBI circular banning cryptocurrencies. It also set aside an RBI circular of April 6, 2018, prohibiting banks and entities regulated by it from providing services with connection to virtual currencies in March this year.
Earlier this week, a Parliamentary Standing Committee on Finance arrived at a consensus that a mechanism should be put in place to regulate cryptocurrency.