Will India’s Upcoming Crypto Consultation Paper be More Rigid?

Economic Affairs Secretary Ajay Seth on May 30 said that a consultation paper on cryptocurrencies is 'fairly ready'

Inflation in India should moderate in the coming months and the government is ready with its consultation paper on cryptocurrencies, economic affairs secretary Ajay Seth told reporters on the sidelines of an event on Monday. Seth said there needed to be a global consensus reached on cryptocurrencies and India would look at regulations enforced in other countries before deciding how it would regulate. In the annual budget this year the government said it would tax gains made through cryptocurrency investments at 30% but the country has still not given the measure legal status.

This might come as a relief to crypto investors who have been facing confusion regarding the legality of digital tokens. The government, so far, has not taken any official stance on these currencies even when a lot of major companies across the globe are starting to accept them as a legal form of payment. Some of these brands are Gucci, Tesla, and Tag Heuer.

30 Percent Tax on Profit from Sale of Cryptocurrency

In her Budget 2022 speech, Finance Minister Nirmala Sitharaman announced a 30 per cent tax on the profits made by selling cryptocurrency. She had also announced an additional 1 per cent Tax Deducted at Source (TDS) on all cryptocurrency transactions.

A consultation paper doesn't necessarily mean that regulation will follow quickly. For instance, a draft bill banning and regulating cryptocurrencies in India had been leaked back in 2019, but the same never made it to lawmakers. In addition, the agenda for the January 2021 session of India's Parliament also suggested that a bill was in the works, but that hasn't seen the light of the day either.

The good news, however, is that Seth said that "there has to be a broad framework and participation of all countries" in cryptocurrency regulation. This is a sign that India's government may not be considering blanket bans on cryptos anymore, something that has been reiterated by many ministers in the past, including Finance Minister Nirmala Sitharaman.