India: Despite tax ‘legitimacy’, here’s why a ‘crypto ban’ is still not off the table

ambcrypto.com:

Soon after the Indian government’s announcement to bring the transfer of digital assets into the 30% tax bracket, Economic affairs secretary Ajay Seth has said that even a ban is still not off the table. Cautioning about risks of virtual assets, he stated in an interview,

“The Finance Bill has sought to provide clarity on taxation but that does not mean that all policy options are off the table. Everything is on the table – whether ban, regulation, etc, but that’s a separate aspect, which is taking time because of the complexity and the nature of the asset.”

Meanwhile, CBDT Chairman JB Mohapatra has also agreed that taxation alone does not lend any “credence or legitimacy” to the legality of such transactions. He noted in another interview that,

“We are not the right authority to be questioning the legality of any activity. Income Tax kicks in when there is an incident for taxing a surplus or recognizing a deficit.”

Therefore, that being said, even when the new legislation is applicable for 2022-23, crypto-related transactions before April 2022 will not be tax-free as per the CBDT Chairman.

Before the national regulation on crypto is put in place, FM had stated that taxing income couldn’t wait. Therefore, a bill that is still in the works, can further clarify the position concerning the legality of “virtual assets.” Until then, crypto is also not illegal. Finance secretary T V Somanathan said soon after,

“They are in a grey area. It’s not illegal to buy and sell crypto.”

However, most industry players, have given a positive reaction to the above announcements as it also means the government’s stamp of approval for the asset class, for the time being. Having said that, it is worth noting that the word “crypto” is missing from