The Indian government recently declared a draft about the cryptocurrency bill that said that the ‘cryptocurrency’ is going to become an asset or commodity. The taxes will now be included depending on your usage as – payments, investment or feasibility.
If It is declared as an asset,then the cryptocurrency will get a mention in the book of accounts. While, if it is treated as a commodity, the returns and gains by investors will be taxed. This will lead to business income at the same interest.
In the history of India, such things have never occurred. But, now cryptocurrencies are going to be classified based on the present technology. To extend support, the government also mentioned in the given report that the transactions would be end-to-end encrypted to maintain regulatory records. So, the people do not have to worry about their security.
Many Cryptocurrency exchanges outlined a high-rise in India. Because of which, the RBI temporarily imposed a cryptocurrency ban and lifted later. As an alternative, A proposal of trading virtual coins was made. But, until today, there wasn’t any legal status. However, this cryptocurrency bill will lead India and its people to progress and achieve new heights.
CRYPTOCURRENCY BILL ADVANTAGES
Many Indian Cryptocurrency investors waited for this bill to get legally sanctioned. It would bring a drastic change and also prevent you from financial frauds. The major advantage is that with this bill, high-level defaulting would be impossible in a market that deals with the cryptocurrency as commodities.
You will have to keep in mind the declaration regarding the policies which includes- the ownership parameters, accounting, KYC, and reporting standards. Additionally, you must note here that the classified cryptocurrency assets can only be exchanged within the borders of India. Crossing which, you will have to pay the necessary taxes.
As the government mentioned before, it won’t go further with the cryptocurrency ban. However, there isn’t any clarity on whether it would be serviced for equity or virtual coins.
THE CRYPTOCURRENCY BAN IN INDIA
The RBI imposed a cryptocurrency ban when people started using it to a great extent. In around 2018, the RBI ordered financial services to cut off from the dealing of cryptocurrencies. Though, until today there hasn’t been any fraud reported in the name of cryptocurrencies.
But, after some legal discussions, the Reserve Bank of India removed the cryptocurrency ban for trading. The lifting of the ban led to easy transactions and good security . You can also enjoy unlimited transactions now!
Considering these, the RBI has flagged off the issues of cryptocurrencies in the past.
This article, Supreme Court India lifts RBI Ban on Crypto Trading would give you a detailed view on the cryptocurrency ban.
CRYPTOCURRENCY Bill ANALYSIS
The people closely related to the bill have said that they are first looking forward to determining what the term ‘cryptocurrency’ would mean in India. “Before talking about how the regulations should work, the government has to spell out what it means by cryptocurrencies,” said a person aware of the development.
First, the government will define the cryptocurrencies. Following which, they will introduce a system that would register the home-grown exchanges. It will make cryptocurrency transactions clear and unambiguous that will help a layman to understand cryptocurrencies trading better.
Jaideep Reddy, the leader of technical law, said that more than 5000 cryptocurrencies existed within India, and each of them had its own legal aspects. So, the government will link everything to technology and use tokens for its end-to-end usage. Trading cryptocurrency will become easier for us through this method.
Classification of Cryptocurrency
Further, you must know that with the classification of cryptocurrency, the cryptocurrency taxation would also be applicable. It will give cryptocurrency dealing the “Grey Zone.” So, you do not need any private dealers as only certain transactions are permitted in the Bill.
If the need arises, the government can apply a similar Security Transaction Tax (STT) to the transactions done with cryptocurrencies.
Moving ahead, the Indian government looks forward to converting this law into an act under the section of CBDC – Central Bank Digital Currency. You do not need to panic as some time will be provided to you to liquidate your asset in the crypto before you are penalized.
With the amendments, the government clarified that this would work in sync with the fiscal year policies. Organizations are required to reveal their ongoing profits and losses along with any deposits made. It means you have to inform them about your dealings with cryptocurrencies. Yet, this policy is warmly welcomed by businesses and industries.
After all this, let us now understand the reason behind introducing the Cryptocurrency Bill.
THE PURPOSE OF CRYPTOCURRENCY BILL
The Union Cabinet, the Lok Sabha Parliamentary Affair Bulletin, has taken this new cryptocurrency bill with the main target as:
- Facilitating the framework and establishing the currency with the Reserve Bank of India.
- To eliminate private organizations, as mentioned above.
- Make certain on-point exemptions to motivate the technical applications of cryptocurrencies.
Cryptocurrency has certainly become well-known in India as it does not reveal one’s identity. This boosts the expansion of cryptocurrencies. With the help of the Inter-Ministerial Committee – IMC, in the beginning, the existing investors will indulge in the Cryptocurrency Bill 2021, and gradually lead to its progress. This Bill will also prevent you from the losses caused by the private organizations. Though, we are still to get a clarity on what the list would include – Bitcoin or Ethereum.
Therefore, from the above-mentioned facts and benefits, we can infer that the current reality is revolving around Cryptocurrency Bill 2021. In all, it is all worth it as everything has been keenly designed and formulated by the Ministry of Electronics and Information Technology’s Draft National Strategy, 2021. Through the evolution of cryptocurrencies and blockchain, the digital investors have trust on overall economic growth of the Indian public as well as the Indian government.