India to soon clarify on crypto, govt see it as a potential revenue source

In the latest development, India’s Finance minister Nirmala Sitharaman said that Government sees crypto as a source of revenue while refusing to give any clear indication over what the govt is planning to do next. Speaking at the Global Forum summit in Bengaluru on 8 March, the minister said the government would clear its position on cryptocurrencies only after the completion of the ongoing consultation process.

She added that a lot of Indians see a future in crypto and therefore she sees a possibility for revenue in it. The minister also praised the industry’s move to welcome taxes on private cryptos invoking laughter from the audience. Responding to a query by Ashish Singhal, founder, and chief executive of crypto trading platform CoinSwitch, Sitharaman stated,

“The consultations are on and everyone involved in the sector is welcome to participate in it. After the consultation process gets duly completed, the finance ministry will mull over it, which is required since the executive will need to be sure that we are not crossing any legal requirements. I’m not getting into whether we are regulating crypto or banning it right now.”

The govt. recently unveiled the budget for FY23 which proposed a 30 percent tax on profit made from the sale of all crypto assets, along with a 1 percent tax deducted at source on all such transactions. This sparked intense speculation that the government had effectively legalized them.

Things got more confusing when the Reserve Bank of India contradicted the government’s stance that cryptocurrencies would never be legal tender. Sitharaman later clarified that while placing a tax on digital assets was a “sovereign right”, they had not been given legal status.

Govt of India mulling plans to launch CBDC by 2022

In terms of CBDC, FM Sitharaman sees ‘clear advantages’ of a central bank-driven digital currency, which she claims can enable bulk payments between institutions, large transactions between central banks of various other nations around the world.

The Finance Minister also stated that the RBI would take the responsibility to craft the CBDC. “The government had a lot of consultation with the RBI over the digital currency. We expect the currency to come out from the apex banker this year itself, “she added.