India will frame cryptocurrency law after global consensus: Report

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India will frame a legislation for cryptocurrencies only after a global consensus emerges on regulating such assets, a report by Bloomberg suggested. The government isn’t planning a law soon to either regulate or tighten provisions, a source told the news agency.

The Indian government took a step closer to removing uncertainties about the legal status of crypto transactions as it revealed plans to tax the income from the transfer of virtual assets at 30%, as announced by Finance Minister Nirmala Sitharaman in her Budget 2022 speech. It had earlier planned to come up with a legislation to make the government’s stand clear on the matter.

From 1 April, a flat 30% tax will be levied on the transfer of virtual digital assets (VDAs) or crypto assets. Along with this, a 1% tax deducted at source (TDS) will be applicable on each transfer of such assets. However, the TDS provision will get active from 1 July onwards.

A global uniform approach on cryptocurrencies is needed and steps by one nation will not be sufficient, Prime Minister Narendra Modi had said in his address to the World Economic Forum in January.

Crypto investments have flourished in India after the country’s top court set aside restrictions imposed by the Reserve Bank of India in March 2020. An October report from Chainalysis, a crypto-analysis firm, found the Indian market grew 641% from July 2020 through June 2021. 

During the budget session, FM Sitharaman clarified that taxing the virtual assets does not mean that the government is legalising it. “Not doing anything to legalise or ban it at this stage,” Sitharaman replied to Budget debate in Rajya Sabha on decision to levy 30% tax on gains from the virtual assets.

(With inputs from Bloomberg)

 

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