With every passing day, the situation for the cryptocurrency industry in India is becoming more and more favorable. However, amidst these developments, the Indian Tax Department has set its eyes upon the growth of the cryptocurrency industry in the country.
It is being reported that the Indian Tax Department is eyeing the implementation of taxes on cryptocurrencies. The regulatory authority is aiming to impose taxes on both; cryptocurrency exchanges and cryptocurrency traders. This means that the cryptocurrency sector may soon be held responsible for paying taxes on providing cryptocurrency services as well as for holding them.
While the cryptocurrency sector in the country is currently curious to know about the taxation rate on cryptocurrencies, the experts have something else to add on this matter. According to the analysts, cryptocurrency investors must not be worried about it and they need to rest assured.
Just recently, reports had started emerging in regards to the tax department taking interest in the mechanism of cryptocurrencies and their growing demand in the country. This meant that the tax department was considering the possibilities of implementing cryptocurrency taxes on the exchanges and investors.
One of the major news reporting firms “Economic Times” covered the news and revealed what the tax department of India intends to do with the crypto-sector.
The particular tax department aiming to impose taxes on cryptocurrencies is currently operating under the Ministry of Finance of India. The department hinted that it may impose taxes on the earnings, revenues, and profits generated by the investors/exchanges from cryptocurrencies.
However, as the cryptocurrencies do not have a valid asset class position assigned to them, no taxes will be implemented on them for the time being.
The CEO of WazirX, Nischal Shetty also shared his thoughts on the recent news emerging in regards to taxes on cryptocurrencies. He stated that in order for the cryptocurrencies to be taxed under the Goods and Services Tax (GST), the government will need to classify cryptocurrencies as one of them.
This would mean that the government would eventually need to grant legal status to cryptocurrencies in the county. This would eventually work out in the favor of the cryptocurrency industry in India.
For now, it is unclear what the government of India is going to decide for the cryptocurrency industry in the country. However, the cabinet is currently preparing a legislative proposal for cryptocurrencies in the country. That is when the cryptocurrency industry in India would know for sure what their fate is going to be.
While the cryptocurrency community in India hopes to see a bright future in the country, the Reserve Bank of India (RBI) is still very cautious about cryptocurrencies. Just recently, the RBI has issued a request for the government of India to be very cautious of Bitcoin and other cryptocurrencies for the high volatility.