Are you an Indian crypto enthusiast eagerly awaiting regulatory clarity? Well, it seems the wait might just get a little longer. While the crypto community in India had pinned hopes on Budget 2022 for some much-needed direction, recent reports suggest the much-anticipated crypto bill is unlikely to make an appearance in the upcoming session.
According to Sidharth Sogani, Managing Director of CREBACO, a research and intelligence company focusing on blockchain and crypto, the bill is still not ready to be presented to the Cabinet, let alone Parliament. Let’s delve deeper into what this means for the Indian crypto landscape.
Crypto Bill: Not Ready for Parliament Yet?
Sogani, in a conversation with AMBCrypto, highlighted that the crypto bill’s journey through the legislative process is still in its early stages.
- Bill Preparation: The bill is currently being drafted and refined.
- Cabinet Approval: Once prepared, it needs to be approved by the Cabinet.
- Parliament Presentation: Only after Cabinet approval can it be presented to the Parliament.
Sogani clarified, “The bill is prepared, it gets approved by the Cabinet and then it goes to the Parliament. So we have no information of the bill being presented to the Cabinet yet.” This suggests that there’s still considerable ground to be covered before the bill can even be tabled in Parliament.
Why the Delay? Lingering Complexity of Crypto and DeFi
Local media sources indicate that the Indian government requires more time to thoroughly deliberate on the complexities of cryptocurrency and the burgeoning world of Decentralized Finance (DeFi). This isn’t the first time the crypto bill has faced delays. The Winter Session of the Indian Parliament, from November 29th to December 23rd, also saw the bill being deferred, marking the second instance of its postponement.
Crypto Taxation: The Government’s Immediate Focus?
While regulatory clarity on the broader aspects of crypto might be delayed, there’s a strong indication that the government is likely to address crypto taxation in the upcoming budget. Sogani believes that the Finance Minister might unveil details about both direct and indirect taxes applicable to crypto assets.
“Most probably in the budget we will hear about taxes–direct and indirect taxes would be addressed by the finance minister. So I believe that the ambiguity in with the exchanges, which the tax departments had last month, that would be resolved,” Sogani stated.
Tax Scrutiny on Crypto Exchanges Intensifies
Recent months have witnessed increased scrutiny from Indian tax authorities towards major Bitcoin service providers. The focus has been on alleged tax evasion. A prominent example is the case of WazirX, a leading Indian crypto exchange, which was investigated for reportedly evading Goods and Services Tax (GST) amounting to 400 million rupees.
Sogani anticipates that such investigations and a stricter tax regime are likely to become more commonplace in the near future. This points towards the government’s intent to generate revenue from the burgeoning crypto sector, even in the absence of a comprehensive regulatory framework.
Taxation Nuances Under Consideration
Sogani further elaborated on the specific tax-related aspects that are likely to be clarified:
- Long-Term Capital Gains Tax: Determining the applicable tax rate for long-term capital gains arising from crypto investments.
- Accounting Standards: Defining how crypto transactions should be recorded in the books of accounts for both companies and individuals.
- GST on Crypto Services: Clarifying the applicable Goods and Services Tax (GST) percentage on various crypto services and transactions.
According to Sogani, the government might opt for introducing these taxation measures through notifications rather than waiting for the full crypto bill to be passed. “In order to do that, you don’t need to make a bill. It can be introduced with notifications,” he explained.
Potential TDS and TCS on Crypto Transactions?
Adding to the taxation discussion, there’s speculation about the government potentially levying Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) on cryptocurrency transactions. Reports suggest that this policy is under consideration and will be announced once a consensus is reached.
IndiaTech, a startup organization, has reportedly written to Finance Minister Nirmala Sitharaman, seeking clarifications on regulations and suggesting amendments to existing laws to accommodate crypto. Furthermore, some reports indicate that the government has already engaged tax experts to formulate disclosure and taxation requirements for businesses and family offices involved with cryptocurrencies.
In Conclusion: Navigating the Uncertainties
The Indian crypto landscape remains in a state of flux. While the comprehensive crypto bill faces further delays, the focus seems to be shifting towards bringing crypto transactions under the tax net. For Indian crypto traders and investors, this means preparing for potential tax implications in the upcoming budget. While regulatory clarity on the broader framework is still awaited, understanding the evolving tax landscape is becoming increasingly crucial. Stay tuned for more updates as India navigates its crypto journey!
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