India Stands Ready with a Cryptocurrency Consultation Paper

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Key Takeaways

  • Ajay Seth, the Secretary of State for Economic Affairs, announced today that a consultation document on cryptocurrency has been finalised and would be presented soon.
  • On the backdrop of an event organised by the Financial Ministry, Seth remarked that a lot of dialogue has taken place from both domestic and international participants.
  • Following the government’s actions, India’s inflation should lessen in the next few months.

Economic affairs secretary Ajay Seth said on Monday that the government’s consultation paper on cryptocurrency is ready. He stated that there are two parts to it. 

“One, our consultation paper is nearly complete, and we have conducted extensive research and consultations with not only domestic institutional parties, but also the World Bank and the International Monetary Fund. As a result, we are hopeful that we will be able to complete our consultation paper soon, “Seth remarked.

India differentiates between cryptocurrencies and crypto assets, and during the Union Budget, Union Finance Minister Nirmala Sitharaman stated that the 30% tax on revenue from these transactions will include a 1% source deduction.

The GST council is also considering a 28 percent tax on cryptocurrency, similar to the existing GST on casinos, betting, and lottery.

“Digital assets are the other. Whatever approach we take to dealing with such assets, there must be a comprehensive framework in place that brings all economies together. This has been stated numerous times. The identical issue is being discussed in other countries. The IMF and the US Treasury are both talking about the same thing. On digital assets, we’re looking at a ‘worldwide paradigm.’ he stated

Investors would have disputed the law’s effectiveness if cryptocurrencies had been controlled in India prior to Terra Luna, according to the RBI governor, who added that the RBI and the government were ‘in sync’ when it came to regulating cryptocurrencies. “We’ve communicated our viewpoint to the government, and they’ll make a thoughtful decision,” he continued.

The Income Tax Act of 1961 has been amended to include a new section 115BBH for the taxation of digital assets.

During a trip to the United States, FM Sitharaman expressed doubts about the size of the global cryptocurrency market and emphasised the need for a global regulatory framework that is appropriate to all countries to prevent cryptocurrency from being used to launder money or fund terrorism, both of which are major concerns for India.

When asked what the next steps are likely to be, Ajay Seth indicated he couldn’t comment. “Whatever the current issues are, they are being addressed in a timely manner,” he said.

Ajay Seth also stated that the administration anticipates lower inflation in the following months.

“Continuous monitoring is carried out on a regular basis….”

It’s not a one-time thing. In fact, we think about it every day and do a structured review. It’s a never-ending process “According to Ajay Seth.

According to Seth, a worldwide agreement on cryptocurrency is required. “For every country, if there is global and widespread consensus around the norms, then there must also be a broad framework of country engagement,” says the expert.

He went on to say that India will look at how other countries regulated before deciding how to regulate the crypto realm.

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Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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