India approaching to tax cryptocurrency trades, ecosystem

India approaching to tax cryptocurrency trades, ecosystem

The government is looking at ways to tax cryptocurrency trades and the complete system around it, a senior official told. The development comes in as the cabinet will soon take up the draft bill on cryptocurrencies. 

The government may allow the usage of blockchain technology and may treat cryptos as a tradable asset class without banning it.  

FM Sitharaman in the past also made her stance on cryptocurrency clear, saying that the government was not looking to shut all options and that people will be given ample windows to experiment with blockchain, bitcoins and cryptocurrency.

"Taxation of cryptocurrency would not lend any official recognition to it," the official who did not wish to be named said. "We are approaching cryptocurrency with the principle that any activity that generates income must pay tax," the official stated.

In the meantime, former RBI Deputy Governor R Gandhi made a case for the taxation of crypto transactions based on payment channels.    

“Cryptocurrencies should be paid for through normal payment channels. If they are not, then it should be deemed as mined and capital gains tax must be levied. That is like voluntary disclosure. The transactions should be fully tracked through a repository,” Gandhi stated last week.