Bitcoin Heading Back Towards $30,000? A quick look at the Indian government’s policy on crypto

by James · April 29, 2023

Bitcoin Heading Back Towards ,000? A quick look at the Indian government’s policy on crypto

Table of Contents

The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 seeks to regulate the digital assets in the country. The Crypto Bill was introduced in the Lok Sabha in 2021. In 2018, the Reserve Bank of India (RBI) proposed a ban on cryptocurrencies. However, the Supreme Court lifted the ban on cryptocurrencies.

Updated April 29, 2023 | 15:01 IST

A quick look at the Indian government’s policy on crypto

New Delhi: Cryptocurrencies as legal tender are not regulated in India by any law. Thus, there is no legal framework to settle disputes arising from cryptocurrency transactions. Trading with cryptocurrencies in India is thus done at the investor’s risk. In March this year, the Indian government also introduced anti-money laundering regulations – the Prevention of Money Laundering Act (PMLA) – on cryptocurrencies and other virtual assets. Finance Minister Nirmala Sitharaman has on a number of occasions asked for increased cooperation in the handling of cryptocurrencies.

Cryptocurrencies in India: The Legal Framework

Cryptocurrency and Regulation of Official Digital Currency Act, 2021 seeks to regulate the digital assets in the country. The Crypto Bill was introduced in the Lok Sabha in 2021. In 2018, the Reserve Bank of India (RBI) proposed a ban on cryptocurrencies. However, the Supreme Court lifted the ban on cryptocurrencies.

See also Bitcoin price reacts frantically as the US Federal Reserve raises interest rates by 50 bps
What is the current tax on cryptocurrency in India?

In the Union Budget 2022, Union Finance Minister Nirmala Sitharaman presented a tax regime for virtual and digital assets that also includes cryptocurrencies. Thus, those who invest in cryptocurrencies are required to report profits and losses as part of their income. There is a 30 percent tax on the transfer of virtual digital assets. Further, there is a 1% tax deducted at source (TDS) on a buyer’s payment beyond a prescribed limit. In addition, cryptocurrencies as a gift are taxable.

A section of investors have supported the taxation of cryptocurrencies, saying such a move will make cryptocurrencies legal in India.

What is the Cryptocurrency Bill 2021?

The Cryptocurrency Bill 2021 aims to regulate the booming cryptocurrency market in India. The bill is also seen as the necessary legal framework before the creation and launch of the official digital currency by the Reserve Bank of India.

Speaking in the Lok Sabha during Parliament’s winter session, Finance Minister Pankaj Chaudhary said that crypto-assets are by definition borderless and require international cooperation to prevent regulatory arbitrage. “Therefore, any legislation on the subject can be effective only with significant international cooperation on the evaluation of the risks and benefits and the development of common taxonomy and standards,” Chaudhary had said.