India Says Crypto Not Illegal as It’s Taxed Like Gambling Win
“They are in a grey area. It’s not illegal to buy and sell crypto,” Finance Secretary T. V. Somanathan said.
The Indian government said it doesn’t treat trading in crypto assets as illegal, a day after it announced taxing such transactions just the same as winnings from gambling.
“They are in a grey area. It’s not illegal to buy and sell crypto,” Finance Secretary T. V. Somanathan said in an interview to Bloomberg Television. “We have now put in a taxation framework that treats crypto assets the same way we treat winnings from horse races, or from bets and other speculative transactions.”
After years of dilly-dallying on how to treat cryptocurrencies, the government’s budget Tuesday proposed taxing income from the transfer of virtual assets at 30% -- effectively removing any uncertainty about the legal status of such transactions.
The steep tax rate on crypto could dissuade trades that have been soaring in India despite the central bank’s warnings about the risks of money laundering, terrorist financing and price volatility. The government is working on a legislation to regulate cryptocurrencies and the proposed law will have to be cleared by India’s Cabinet before before being taken to lawmakers.
“What will happen to the future regulation of crypto that’s an ongoing debate,” Somanathan said. “The government’s approach is to consult widely and also to look at what’s happening internationally,” he said.
For now, the government won’t jump the gun on regulation and would stick to taxing any income that is earned from such transactions, he said.
While private virtual coins will not be a legal tender, the Reserve Bank of India plans to launch its digital currency in the year starting April 1, which will usher in cheaper, more efficient currency management, according to the government.
©2022 Bloomberg L.P.