India’s Income Tax Department may soon target crypto trades and ecosystem

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As India’s Income Tax Department plans to tax crypto traders and crypto exchanges soon, experts believe investors should be reassured.

According to the ET Nows report, the Tax Department, which reports to India’s Ministry of Finance, has shown interest in taxing crypto income through commerce and exchanges. However, sources say the move will not allow cryptocurrencies to have a valid asset class position.

Speaking to Cointelegraph, Indian entrepreneur Nischal Shetty, CEO of WazirX crypto exchange, said clarifying the goods and services tax (GST) related to crypto will help identify the asset class of cryptocurrencies:

It goes without saying that your crypto income is taxable like other income and must be declared in tax returns. At this time, it is not clear whether GST would be applied on the amount of cryptocurrency purchased or on transaction fees paid by the user.

In this sense, the initial report suggests that the Indian government believes that all activities that generate cryptocurrency income should be taxed. However, a legislative proposal soon published by the cabinet will bring more clarity on this decision.

On September 9, Reserve Bank of India Governor Shaktikanta Das echoed concerns over cryptocurrencies such as Bitcoin (BTC): We conveyed to the government our serious and overriding concerns about cryptocurrencies from a financial stability perspective.

Citing the possibilities of a crypto-tax bill, Indian investor Evan Luthra of Luthra Group told Cointelegraph that taxing digital currencies is a good thing.

I think investors and potential investors have nothing to fear. Governments that realize the true potential of cryptocurrencies and put in place policies to support innovation will be the leaders of the future.

Related: Former Reserve Bank Official Pushes India To Accept Crypto

The Reserve Bank of India (RBI) shared a booklet on January 25, exploring use cases for a digital version of fiat currency.

While the government sees only two viable options for crypto, adoption and full ban, the RBI plans to implement its own version of CBDC when needed.

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