Opinion

Future of Cryptocurrency in India I Taxes on Cryptocurrencies

Snapshot:

  • Reserve Bank Of India and Its take on cryptocurrency 
  • Monsoon Parliament Session and The Crypto Bill
  • Taxes on cryptocurrencies

While the Government of India is still regulating the crypto industry in the country, India has emerged as one of the largest contributors to the global cryptocurrency sectors. Despite the blurry and hazy weather around cryptocurrency in the country, citizens are actively investing in the new financial asset called cryptocurrency.

Although there have been initiatives taken by the Government of India during several of its parliamentary session, there is no clear verdict. The front players of the cryptocurrency sector, such as CoinDCX, WazirX, and other crypto exchanges seem to be hopeful and positive about the verdict. But the question still remains the same what is the future of cryptocurrency in India. 

We will try to explore the past events in the nation and mitigate our way towards the conclusion. Let’s explore what has happened so far. 

What is Cryptocurrency? 

Before we try to understand the future of a certain technology let us clear all our existing doubts about cryptocurrency. 

A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.

Reserve Bank Of India and Its take on cryptocurrency 

At the beginning of 2018, in April, the Reserve Bank of India (RBI) advised the entities it regulates not to deal with any digital currency. However, much later in the year 2020, the Supreme court did away with this ban by RBI and permitted the banks and other financial institutions to handle cryptocurrencies. 

RBI had announced in May 2021 that banks would be permitted to facilitate cryptocurrency trades after the Supreme Court ruling. The RBI has concerns about the cryptocurrencies traded in the market and has conveyed the same to the government. On cryptocurrency, there are no differences between the central bank and the finance ministry, RBI Governor Shaktikanta Das mentioned. He even added that they should now await the final decision on the matter from the Centre. 

Monsoon Parliament Session and The Crypto Bill 

As stated by Finance minister Nirmala Sitharaman, the crypto bill is nothing but spadework done by her team in the best interest of every investor. As she mentioned during one of her press conferences, the Cabinet Note has been prepared and just remains to be discussed in the meetings. 

The minister did talk about the availability of a window for fintech, pilot, and experiment projects but the final decision shall rest in the hands of the cabinet. The cryptocurrency bill could not be discussed in the Budget session due to the rising atrocities of Covid-19 which led to the truncation of the session. 

As explained on the Parliament’s website the crypto bill aims to provide and create a facilitative framework for the creation of digital currency to be issued by the Reserve Bank of India. The crypto bill also puts a prohibition on the usage of private cryptocurrencies within the country. 

The monsoon session of parliament will surely witness a high wit debate around the propositions made in the crypto bill. Many news reports claim that the Indian crypto bill shall represent one of the strictest policies against cryptocurrencies in the entire world. It could even criminalize possession, issuance, mining, transferring, and trading crypto assets. However, we should not jump to conclusions and wait for the government to clarify its stance on this bill. 

Also, Read about the impacts the crypto Moonsoon Parliament session will have on the future of cryptocurrencies. 

Is cryptocurrency Illegal in India? 

To answer the question straight, No. Cryptocurrencies are not illegal in India. However, these cryptocurrencies or digital assets are not yet regulated by the government of India. They are not illegal since they are not authorized for use by any central authority in the nation. Cryptocurrencies are definitely out of the scope of regulations, guidelines, and rules as of now in India. 

Taxes on cryptocurrencies 

Though India hasn’t yet imposed regulations on cryptocurrency transactions, it has asked for transparency in all such undertakings. In April, amendments were introduced in the Companies Act for this purpose. Owing to this transparency, digital asset and the gains thereof are likely to be counted as a capital asset, which is bound by taxes under capital gains. But companies are not yet sure how to treat the different types of gains and income in this regard.

Future of Cryptocurrency in India 

There is an impressive startup culture developing in India around the blockchain technology and cryptocurrency sector. Crypto enthusiasts are betting on analyst views that say there might not be a blanket ban on cryptocurrencies. Crypto enthusiasts are betting on analyst views that say there might not be a blanket ban on cryptocurrencies. There are many crypto enthusiasts who have been betting against the verdict of analysts claiming a blanket ban on cryptocurrencies in India. While experts of the industry believe that India should not and must not lag behind while the world is rapidly accepting and developing over these technologies. 

Assumptions and beliefs such as these have even led to reports that crypto might be allowed as an asset class in India. However, the Government has not passed any legal tender pertaining to it. No one in the nation can predict what will be the government’s stance on this sector. However, the front runners and the Unicorn startup ventures seem to be very hopeful. Read about Ramalingam Subramaniam’s, Head of Marketing CoinDCX, fireside chat to understand what prospects cryptocurrency has for India. 

Summing it Up! 

Indians have invested around $ 6.6 billion in cryptocurrencies till May 2021, according to an Analytics Insight report. This saw an over 600 percent jump from $923 million in April 2020. Nearly 1.5 crore Indians are said to have invested in cryptocurrencies. At present, over 350 startups operating in the blockchain and cryptocurrency space. Considering the huge interest from the investors and rapidly grown cryptocurrency market, the government is taking a cautious approach towards cryptocurrencies. We can definitely say that the future of cryptocurrency in India is quite bright. 

It’s still not late to learn more about the cryptocurrency industry and blockchain technology while the industry is being regulated. DCX Learn offers various free cryptocurrency courses for beginners.

 CoinDCX, India’s largest crypto exchange, has also launched its simplest and easiest crypto investment app, CoinDCX for seamless crypto investing experience.

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