The Government of India introduced the Budget for the Financial year 2023-24. Surprisingly there were no provisions for cryptocurrency regulation, not even a policy signal. Earlier, RBI Governor Shaktikanta Das and Finance Minister Nirmala Sitharaman have been vocal against cryptocurrencies. However, the Government of India appears supportive of the underlying Blockchain Technology.
Let us take a tour of past policy decisions for cryptocurrencies.
Past Decisions on Crypto
Ban in 2018
The first policy decision for the then financial year came as RBI banned financial institutions from dealing with entities that trade or deal in cryptocurrencies like Bitcoin. Cryptocurrencies were then termed stateless digital currencies by RBI. They further opined that cryptocurrencies would boost illegal transactions.
RBI’s stance on cryptocurrencies has not changed much after that decision.
Ban Reversal by the Supreme Court in 2020
In 2020, Supreme Court reversed the RBI’s decision. The decision resulted from crypto exchanges filing a writ petition and winning the case. The Supreme Court held the RBI circular unconstitutional.
Budget 2022-23
The most significant decision after the ban of 2018 was the 30% tax on Virtual Digital Assets. Cryptocurrency profits and earnings by selling NFTs were taxed at a flat 30% rate. Further, crypto traders were not allowed to offset profits and losses. In contrast, for equity markets in India, losses can be carried over eight financial years.
1% TDS in July 2022
Since July 2022, a 1% Tax Deductible at Source(TDS) has been introduced for every crypto transaction between the rupee (INR) and a cryptocurrency. Further, some exchanges were also made responsible for collecting TDS from users.
Statements by Key Decision Makers
Finance Minister Nirmala Sitharaman has been a vocal critic of cryptocurrencies. She had earlier called for global regulations for banning or severely restricting cryptocurrencies. She has once even compared cryptocurrencies with UPI, a payment channel for small transactions, saying the latter is more powerful.
RBI Governor Shaktikanta Das has criticized cryptocurrencies on various platforms. A few days earlier, he called cryptocurrencies “nothing but gambling.” In Dec 2022, he was noted predicting that cryptocurrencies would bring the next financial crisis.
However, Prime Minister Narendra Modi has been a vocal supporter of blockchain technology. As early as 2018, he voiced support for blockchain, saying it would benefit Indian agriculture.
He has also been awarded blockchain-based digital degrees at IIT Kanpur, a premier educational institution in India. Speaking at the World Economic Forum conference at Davos, he tried to create a consensus for the same global vision about cryptocurrencies.
Cryptocurrencies face a tough challenge in India with respect to taxation and non-regulation. However, with a global consensus on viewing crypto in a positive light, things are soon expected to take a positive turn in the near future.
Disclaimer: Voice of crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.
