This is Modi government's stance on cryptocurrency in India
What's the story
Union Commerce Minister Piyush Goyal has clarified the Indian government's position on cryptocurrency. He said that the government does not promote or demote cryptocurrencies, but only taxes them. "We have not been encouraging cryptocurrency, which does not have sovereign backing or which is not backed by assets," Goyal said during his two-day visit to Doha, to boost trade and investments between India and Qatar.
Taxation focus
We are taxing it very heavily: Goyal
Goyal stressed that the government intends to regulate cryptocurrencies through heavy taxation instead of banning them outright. "As far as cryptocurrency, which is not backed by the Central Govt, while there is no ban as such, we are taxing it very heavily," he said. He further explained that this approach is intended to prevent people from getting trapped in unbacked cryptocurrencies with no support system.
Digital currency
India to introduce sovereign digital currency
Goyal also revealed India's plan to introduce a sovereign digital currency, backed by the Reserve Bank of India (RBI). The new digital rupee will have features similar to stablecoins. It will also have blockchain-based traceability for transparency and compliance. "Our idea is that this will only make it easier to transact," Goyal said about the upcoming digital currency.
Tax regulations
India's tax framework for virtual digital assets
India has established a clear tax framework for virtual digital assets (VDAs) like cryptocurrencies and NFTs, without granting them legal status. In the Union Budget 2022-23, the government announced a 30% tax on income from the transfer of VDAs. The rate applies irrespective of profit or loss in other transactions in the taxpayer's portfolio. A 1% Tax Deducted at Source (TDS) was also introduced on all crypto transactions above ₹10,000 from July 1, 2022.