The Government is not considering any plan to reduce taxes on cryptocurrency transactions. In a written reply to a query in the Rajya Sabha on whether the Government wants to exempt cryptocurrency transactions from taxes, Minister of State for Finance Pankaj Chaudhary said, “There is no such proposal under consideration.”
In Budget 2022, the Government has announced a flat 30% tax on income from cryptocurrencies and also 1% TDS on crypto transactions.
Chaudhary said that in order to deter risky crypto transactions the Reserve Bank of India (RBI) has been cautioning users, holders and traders that “dealing in VCs is associated with potential economic, financial, operational, legal, customer protection and security related risks.”
Through a circular dated May 31, 2021, the RBI also advised its regulated entities to continue to carry out customer due diligence processes for transactions in VCs, in line with regulations governing standards for Know Your Customer (KYC), Anti-Money Laundering (AML), Combating of Financing of Terrorism ( CFT), obligations under Prevention of Money Laundering Act (PMLA), 2002, etc.
Central Bank Digital Currency
Responding to another query on the status of the Indian Digital Rupee, Chaudhary said, “RBI has started the work for a phased implementation of the announcement made on Introduction of Digital Rupee-Introduction of Central Bank Digital Currency (CBDC) in the budget speech 2022-23.”
Transfer of tangible assets through NFTs is legally enforceable
The transfer of NFTs, which includes the transfer of an underlying tangible asset, is legally enforceable.
“Vide notification no. 75/2022 dated 30.06.2022, Central Government specified a token which qualifies to be a virtual digital asset as non-fungible token within the meaning of sub-clause (a) of clause (47A) of section 2 of the Act but shall not include a non-fungible token whose transfer results in transfer of ownership of underlying tangible asset and the transfer of ownership of such underlying tangible asset is legally enforceable,” said Chaudhary.
Finance Minister Nirmala Sitharaman had earlier said in the Lok Sabha that RBI is for banning virtual currencies but a global effort is required to regulate them.