View: How Budget 2022 should tax cryptocurrencies

economictimes.indiatimes.com:

Bitcoin was the first cryptocurrency to hit the market in 2009. After that, several cryptocurrencies were launched including Bitcoin Cash, Ripple (XRP), Litecoin, etc. As per an estimate, more than 8,000 cryptocurrencies exist as of January 2022. As per a recent study by Nasscom and WazirX, India's cryptocurrency market has seen exponential growth over the past few years. It is expected that the investment by Indians in cryptocurrency could touch $241 million by 2030. Currently, India has the highest number of crypto owners globally. At present, no legislation governs, regulates, or prohibits dealing in cryptocurrencies in India. Therefore, it is not illegal to sell, purchase, deal or mine cryptocurrencies or set up a cryptocurrency exchange in India. However, considering the risks associated with investment in cryptocurrencies, there was speculation that a bill, set to be introduced in the Winter Session of Parliament, may either ban or regulate cryptocurrencies. However, the bill was not introduced, and it is now expected that the government may take up this bill in the Budget Session. If the government does not prohibit Indians from dealing in cryptocurrencies, the government could introduce a regressive tax regime for cryptocurrencies.

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Considering the size of the market, the amount and the risk involved, cryptocurrencies should be taxed as follows:1.Classification as capital asset In view of Section 2(14) of the Income-tax Act 1961, cryptocurrencies could be deemed capital assets if purchased for investments by taxpayers. Therefore, any