“It is critical for the Union Budget to clearly lay down taxation clarity around crypto assets by formally naming them in tax laws,” said a letter to India’s Finance Minister by IndiaTech.org, an industry body of startups including crypto exchanges. The group plays an active part in discussions about policy framework to regulate crypto with government and India’s central bank, the Reserve Bank of India.
India’s Budget Session is expected to start on Jan. 31, the budget is likely to be presented Feb. 1, and the session is likely to last until at least the end of April.
First reported by the Economic Times, the letter was sent on the day CoinDesk released an in-depth report about how India’s crypto exchanges were recently “inspected” by tax agencies, “inspections” in which more than Rs 84 crore ($11 million) was “recovered and more is likely. One of the exchanges inspected, Binance-owned WazirX blamed a lack of clarity in regulation for the matter. It’s that lack of clarity the group seeks to address.
“We have just submitted the letter yesterday and the intent is for the government to take the recommendations into consideration in the upcoming budget,” said Rameesh Kailasam, President and Chief Executive of IndiaTech.
IndiaTech.org also recommended “that there may not be the need for a Bill around cryptocurrency if existing provisions are appropriately amended/notified accommodating cryptoassets and regulated starting with the upcoming Union Budget.”
India’s draft cryptocurrency bill is still in the works and probably won’t become law until after next year’s Budget Session ends in April, as reported by CoinDesk.
The group’s recommendations include granting cryptocurrencies recognition as digital assets, enabling provisions in the Direct Tax laws, and that indirect tax (GST or Goods and Services Tax) should be levied only on the platform fees of the exchanges, on the brokerage or exchange fees (like it happens in stock markets) and not on the transaction value.”
The letter also seeks the introduction of a system to register Indian-founded cryptocurrency exchanges by giving the status of Authorised Dealers to them. It asked for setting up necessary checks and balances including allowing only Indian founders to operate such businesses (minimum ownership of 26% by Indian founders/entities in Crypto exchanges).
Asked whether IndiaTech.org realistically sees the recommendations getting implemented, Kailasam said, “we have suggested a practical way forward which is doable. Our white paper released earlier was also in the same direction to address concerns and move towards a practical regulatory process,”