Taxing Cryptos- a sovereign right

Taxing Cryptos- a sovereign right

Topic: Economy

Context: Finance Minister on replying to a debate on the general discussion on the Budget in the Rajya Sabha said taxing Cryptocurrency is the right of the sovereign and banning it or not is another issue.

Concept:

• The Budget has termed Virtual Digital Asset (VDA) has been posed to levy a 30% tax besides the 1% TDS (Tax Deducted at Source) on all profits from transactions in such assets.
• Also, gifting of such assets will be taxed in the hands of the recipient.
• Moreover, sale of these assets cannot be set off against any other income.

Background:

• The cryptocurrency tax comes at a time when the government is considering the Cryptocurrency and Regulation of Official Digital Currency Bill.
• RBI vociferously opposed the rollout of legalizing private cryptocurrencies due to their deleterious impact on country’s financial stability. RBI Governor said, “Cryptocurrencies have no underlying (value), not even a tulip.”
• In 2018, RBI announced a ban on Cryptocurrencies and in 2020, the Supreme Court quashed the RBI curb on cryptocurrency trade in India.
• In 2022, the government is framing new laws (inserting Section 115 BBH in the Income Tax Act) before introducing Crypto in the public domain.