India's financial minister Nirmala Sitharaman has expressed that adopting crypto in the current Indian economy could lead to economic instability. The context of such a remark was an inquiry raised in the Lok Sabha, referring to the lower house of the Indian parliament. However, this does not necessarily indicate a lack of globalization.
Sitharaman has promptly remarked that whether concepts like cryptocurrency needed to be banned or imposed strict regulations depended on the nature of its international relations. This refers to collaborating with international entities to decide on the risks and limitations. It is also involved in determining the transformation of the norm and standards concerning taxing and other standardized procedures.
The Central Bank of India has further concluded that financial policies are the driving force behind such currencies as crypto is merely speculative and hence, had maintained its opinions to be strictly against investment.
Since the start, the RBI or Reserve Bank of India (also known as the Central Bank of India) has consistently been against investment in digital currencies. They had imposed restrictions to the extent that even banks in India have been strictly instructed not to offer cryptocurrency-related services. However, this ban on crypto services was only until 2018, since the Supreme Court dropped this ban on India in 2020.
It is thus quite evident that the Indian government has not been very welcoming to the crypto world. It is significantly indecisive about whether the crypto center should be banned or stipulated. However, amidst such indecisiveness and loosely built structure of regulations, the one thing they have made concrete is two laws related to crypto. Both of these laws pertain to taxation and deduction.
The ministry of finance in India had announced stark taxation of not less than 30% on any gains from crypto investment in the first law. At the same time, the second law stated a deduction termed Tax Deduction at the Source or TDS. The tax deduction would amount to not less than 1%.
Such heavy taxation brought a substantial negative impact on the freshly growing crypto industry in India.
The depreciation rate in the trading volumes fell almost immediately after the surcharge of 30% became effective. The crypto trading volume received another blow after the TDS announcement. All the optimistic traders about India introducing reasonable measures have moved shop to other crypto-friendly countries.
Recently, IAMAI also dissolved the Indian Blockchain and Crypto Assets Council